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Access to public capital markets and employment growth

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  • Borisov, Alexander
  • Ellul, Andrew
  • Sevilir, Merih

Abstract

This paper examines the effect of going public on firm-level employment. To establish a causal effect, we employ a novel data set of private firms to investigate employment growth in IPO firms relative to a group of firms that file for an IPO but subsequently withdraw their offering. We find that employment increases significantly after going public, and the increase is more pronounced in industries with requirements for highly skilled labor and greater dependence on external finance. Improved ability to undertake acquisitions and a strategic shift toward commercialization, rather than agency problems, explain employment growth. Overall, these results highlight the importance of going public for firms’ employment policies.

Suggested Citation

  • Borisov, Alexander & Ellul, Andrew & Sevilir, Merih, 2021. "Access to public capital markets and employment growth," Journal of Financial Economics, Elsevier, vol. 141(3), pages 896-918.
    • Handle: RePEc:eee:jfinec:v:141:y:2021:i:3:p:896-918
    DOI: 10.1016/j.jfineco.2021.05.036
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    More about this item

    Keywords

    Employment growth; Human capital; IPOs; Financial constraints; Acquisitions;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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