The impact of going public on firm-level employment: Evidence from IPO listed firms on BIST

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