“Access to Public Capital Markets and Employment Growth” by Prof. Andrew Ellul
Prof. Andrew Ellul
Professor of Finance
This paper examines the effect of going public on firm-level employment. To establish a causal effect, we employ a novel dataset 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 M&As 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.