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The Impact of Going Public on Firm-Level Employment: Evidence from IPO Listed Firms on BIST

Author

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  • Ahmet Usta

    (Recep Tayyip Erdogan University, Faculty of Economics and Administrative Sciences, Department of Economics, Rize, Turkey)

Abstract

This paper investigates how issuing initial public offerings (IPOs) affects corporate decisions in a firm. We focus on the impacts of capital raised at IPO event dates on subsequent employment growth in IPO listed firms that went public between 2000 and 2016 in Borsa Istanbul (BIST). We find that accessing the public equity market has a positive impact on employment growth through accessing the debt market. As their borrowing abilities improve, firms tend to increase their expenditures on physical capital. In turn, firms need to hire more employees to run their operations. Moreover, we find that reliance on external financing above the median degree or being younger than the median sample age positively and significantly affect employment growth during IPO and in the post-IPO event years. Finally, we calculate the effects of marginal changes in primary capital on firms’ assets, cash holdings, capital expenditure, personnel expenditure, and debt, and find that the firms tend to spend an incremental amount of externally generated funds via IPO mostly on physical capital expenditures.

Suggested Citation

  • Ahmet Usta, 2021. "The Impact of Going Public on Firm-Level Employment: Evidence from IPO Listed Firms on BIST," Istanbul Business Research, Istanbul University Business School, vol. 50(2), pages 331-357, November.
    • Handle: RePEc:ist:ibsibr:v:50:y:2021:i:2:p:331-357
    DOI: 10.26650/ibr.2021.50.861504
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    References listed on IDEAS

    as
    1. Giuseppe Moscarini & Fabien Postel-Vinay, 2012. "The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment," American Economic Review, American Economic Association, vol. 102(6), pages 2509-2539, October.
    2. repec:spo:wpmain:info:hdl:2441/59cr4u3mmr9pobrceptvua5g8c is not listed on IDEAS
    3. Shai Bernstein, 2015. "Does Going Public Affect Innovation?," Journal of Finance, American Finance Association, vol. 70(4), pages 1365-1403, August.
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