Research Article
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Year 2021, , 331 - 357, 07.10.2021
https://doi.org/10.26650/ibr.2021.50.861504

Abstract

References

  • Akdoğan, K., Karaçimen, E., & Yavuz, A.A. (2019). Cross-country evidence on the link between job security and housing credit. The Journal of Housing and Built Environment, 34, 947-963. https://doi.org/10.1007/s10901-019-09647-1
  • Andriansyah, A., & Messinis, G. (2016). Intended use of IPO proceeds and firm performance: A quantile regression approach. Pacific Basin Finance Journal, 36, 14–30. https://doi.org/10.1016/j.pacfin.2015.12.001
  • Attar, M.A. (2013). Tackling youth unemployment: The Turkish experience. The Future of Iran: EconomicReforms-Conference Papers, London: The Legatum Institute. http://yunus.hacettepe.edu.tr/~maattar/MAAttar_Legatum.pdf
  • Babina, T., Ouimet, P., & Zarutskie, R. (2020). IPOs, human capital, and labor reallocation. https://dx.doi.org/10.2139/ssrn.2692845
  • Baghai, R. P., & Silva, R. C. (2019). The impact of going public on the firm’s human capital. https://www.edhec.edu/sites/www.edhec-portail.pprod.net/files/phd_finance/the_impact_of_going_public_on_the_firms_human_capital.pdf
  • Bernstein, S. (2015). Does going public affect innovation? The Journal of Finance, 70(4), 1365–1403. https://doi.org/10.1111/jofi.12275
  • Bharat, J. A., & Kini, O. (1994). The post-issue operating performance of IPO firms. The Journal of Finance, 49(5), 1699–1726. https://doi.org/10.1111/j.1540-6261.1994.tb04778.x
  • Borisov, A., Ellul, A., & Sevilir, M. (2015). Access to public capital markets and employment growth. CEPR Discussion Paper No. DP10521. https://ssrn.com/abstract=2592343
  • Calomiris, C. W., Larrain, M., & Schmukler, S. L. (2018). Capital inflows, equity issuance activity, and corporate investment. NBER Working paper No. 24433. http://www.nber.org/papers/w24433
  • Carpenter, R. E., & Rondi, L. (2006). Going public to grow? Evidence from a panel of Italian firms. Small Business Economics, 27(4–5), 387–407. https://doi.org/10.1007/s11187-005-4323-3
  • Carter, R. B., Dark, F. H., & Singh, A. K. (1998). Underwriter reputation, initial returns, and the long-run performance of IPO stocks. The Journal of Finance, 53(1), 285–311. https://doi.org/10.1111/0022-1082.104624
  • Chemmanur, T. J., & Paeglis, I. (2005). Management quality, certification, and initial public offerings. Journal of Financial Economics, 76(2), 331–368. https://doi.org/10.1016/j.jfineco.2004.10.001
  • Colciago, A., Lindenthal, V., & Trigari, A. (2019). Who creates and destroys jobs over the business cycle? DNB Working Paper. https://doi.org/10.2139/ssrn.3352509 Dong, M., Michel, J. S., & Pandes, J. A. (2011). Underwriter quality and long-run IPO performance. Financial Management, 40(1), 219–251. https://doi.org/10.1111/j.1755-053X.2010.01140.x
  • Erel, I., Julio, B., Kim, W., & Weisbach, M. S. (2012). Macroeconomic conditions and capital raising. Review of Financial Studies, 25(2), 341–376. https://doi.org/10.1093/rfs/hhr085
  • Fort, T. C., Haltiwanger, J., Jarmin, R. S., & Miranda, J. (2013). How firms respond to business cycles: The role of firm age and firm size. IMF Economic Review, 61(3), 520–559. https://doi.org/10.1057/imfer.2013.15
  • Hopenhayn, H. (1992). Entry , exit , and firm dynamics in long run equilibrium. Econometrica, 60(5), 1127–1150. https://doi.org/10.2307/2951541
  • Jovanovic, B. (1982). Selection and the Evolution of Industry. Econometrica, 50(3), 649–670. https://doi.org/10.2307/1912606
  • Karacimen, E. (2014). Financialization in Turkey: The case of consumer debt. Journal of Balkan and Near Eastern Studies, 16, 161-180. https://doi.org/10.1080/19448953.2014.910393
  • Kim, W., & Weisbach, M. S. (2008). Motivations for public equity offers: An international perspective. Journal of Financial Economics, 87(2), 281–307. https://doi.org/10.1016/j.jfineco.2006.09.010
  • Liu, K., & Arthurs, J. (2019). How does dependence on key employers matter for initial public offerings of U.S. high-tech firms?. Journal of Business Research, 102, 74-82. https://doi.org/10.1016/j.jbusres.2019.05.013
  • Moscarini, G., & Postel-Vinay, F. (2012). The contribution of large and small employers to job creation in times of high and low unemployment. American Economic Review, 102(6), 2509–2539. https://doi.org/10.1257/aer.102.6.2509
  • Özlale, Ü., & Polat, B. (2019). Understanding firm dynamics and job creation in Turkey using the entrepreneur information system (No. 2019–2). İstanbul.
  • Pagano, M., Panetta, F., & Zingales, L. (1998). Why do companies go public? An empirical analysis. The Journal of Finance, 53(1), 27–64. https://doi.org/10.1111/0022-1082.25448
  • Pugsley, B. W., & Şahin, A. (2019). Grown-up business cycles. Review of Financial Studies, 32(3), 1102–1147. https://doi.org/10.1093/rfs/hhy063
  • Rajan, R. G., & Zingales, L. (1998). Financial dependence and growth. The American Economic Review, 88(3), 559–586. https://www.jstor.org/stable/116849
  • Subrahmanyam, A., & Titman, S. (1999). The going-public decision and the development of financial markets. The Journal of Finance, 54(3), 1045–1082. https://doi.org/10.1111/0022-1082.00136
  • Takahashi, H., & Yamada, K. (2015). IPOs, growth, and the impact of relaxing listing requirements. Journal of Banking and Finance, 59, 505–519. https://doi.org/10.1016/j.jbankfin.2015.04.029
  • Yeldan, A. E., & Ünüvar, B. (2015). An assessment of the Turkish economy in the AKP era. Research and Policy on Turkey, 1(1), 11–28. https://doi.org/10.1080/23760818.2015.1099779
  • Zingales, L. (2000). In search of new foundations. Journal of Finance, 55(4), 1623–1653. https://doi.org/10.1111/0022-1082.00262

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

Year 2021, , 331 - 357, 07.10.2021
https://doi.org/10.26650/ibr.2021.50.861504

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.

References

  • Akdoğan, K., Karaçimen, E., & Yavuz, A.A. (2019). Cross-country evidence on the link between job security and housing credit. The Journal of Housing and Built Environment, 34, 947-963. https://doi.org/10.1007/s10901-019-09647-1
  • Andriansyah, A., & Messinis, G. (2016). Intended use of IPO proceeds and firm performance: A quantile regression approach. Pacific Basin Finance Journal, 36, 14–30. https://doi.org/10.1016/j.pacfin.2015.12.001
  • Attar, M.A. (2013). Tackling youth unemployment: The Turkish experience. The Future of Iran: EconomicReforms-Conference Papers, London: The Legatum Institute. http://yunus.hacettepe.edu.tr/~maattar/MAAttar_Legatum.pdf
  • Babina, T., Ouimet, P., & Zarutskie, R. (2020). IPOs, human capital, and labor reallocation. https://dx.doi.org/10.2139/ssrn.2692845
  • Baghai, R. P., & Silva, R. C. (2019). The impact of going public on the firm’s human capital. https://www.edhec.edu/sites/www.edhec-portail.pprod.net/files/phd_finance/the_impact_of_going_public_on_the_firms_human_capital.pdf
  • Bernstein, S. (2015). Does going public affect innovation? The Journal of Finance, 70(4), 1365–1403. https://doi.org/10.1111/jofi.12275
  • Bharat, J. A., & Kini, O. (1994). The post-issue operating performance of IPO firms. The Journal of Finance, 49(5), 1699–1726. https://doi.org/10.1111/j.1540-6261.1994.tb04778.x
  • Borisov, A., Ellul, A., & Sevilir, M. (2015). Access to public capital markets and employment growth. CEPR Discussion Paper No. DP10521. https://ssrn.com/abstract=2592343
  • Calomiris, C. W., Larrain, M., & Schmukler, S. L. (2018). Capital inflows, equity issuance activity, and corporate investment. NBER Working paper No. 24433. http://www.nber.org/papers/w24433
  • Carpenter, R. E., & Rondi, L. (2006). Going public to grow? Evidence from a panel of Italian firms. Small Business Economics, 27(4–5), 387–407. https://doi.org/10.1007/s11187-005-4323-3
  • Carter, R. B., Dark, F. H., & Singh, A. K. (1998). Underwriter reputation, initial returns, and the long-run performance of IPO stocks. The Journal of Finance, 53(1), 285–311. https://doi.org/10.1111/0022-1082.104624
  • Chemmanur, T. J., & Paeglis, I. (2005). Management quality, certification, and initial public offerings. Journal of Financial Economics, 76(2), 331–368. https://doi.org/10.1016/j.jfineco.2004.10.001
  • Colciago, A., Lindenthal, V., & Trigari, A. (2019). Who creates and destroys jobs over the business cycle? DNB Working Paper. https://doi.org/10.2139/ssrn.3352509 Dong, M., Michel, J. S., & Pandes, J. A. (2011). Underwriter quality and long-run IPO performance. Financial Management, 40(1), 219–251. https://doi.org/10.1111/j.1755-053X.2010.01140.x
  • Erel, I., Julio, B., Kim, W., & Weisbach, M. S. (2012). Macroeconomic conditions and capital raising. Review of Financial Studies, 25(2), 341–376. https://doi.org/10.1093/rfs/hhr085
  • Fort, T. C., Haltiwanger, J., Jarmin, R. S., & Miranda, J. (2013). How firms respond to business cycles: The role of firm age and firm size. IMF Economic Review, 61(3), 520–559. https://doi.org/10.1057/imfer.2013.15
  • Hopenhayn, H. (1992). Entry , exit , and firm dynamics in long run equilibrium. Econometrica, 60(5), 1127–1150. https://doi.org/10.2307/2951541
  • Jovanovic, B. (1982). Selection and the Evolution of Industry. Econometrica, 50(3), 649–670. https://doi.org/10.2307/1912606
  • Karacimen, E. (2014). Financialization in Turkey: The case of consumer debt. Journal of Balkan and Near Eastern Studies, 16, 161-180. https://doi.org/10.1080/19448953.2014.910393
  • Kim, W., & Weisbach, M. S. (2008). Motivations for public equity offers: An international perspective. Journal of Financial Economics, 87(2), 281–307. https://doi.org/10.1016/j.jfineco.2006.09.010
  • Liu, K., & Arthurs, J. (2019). How does dependence on key employers matter for initial public offerings of U.S. high-tech firms?. Journal of Business Research, 102, 74-82. https://doi.org/10.1016/j.jbusres.2019.05.013
  • Moscarini, G., & Postel-Vinay, F. (2012). The contribution of large and small employers to job creation in times of high and low unemployment. American Economic Review, 102(6), 2509–2539. https://doi.org/10.1257/aer.102.6.2509
  • Özlale, Ü., & Polat, B. (2019). Understanding firm dynamics and job creation in Turkey using the entrepreneur information system (No. 2019–2). İstanbul.
  • Pagano, M., Panetta, F., & Zingales, L. (1998). Why do companies go public? An empirical analysis. The Journal of Finance, 53(1), 27–64. https://doi.org/10.1111/0022-1082.25448
  • Pugsley, B. W., & Şahin, A. (2019). Grown-up business cycles. Review of Financial Studies, 32(3), 1102–1147. https://doi.org/10.1093/rfs/hhy063
  • Rajan, R. G., & Zingales, L. (1998). Financial dependence and growth. The American Economic Review, 88(3), 559–586. https://www.jstor.org/stable/116849
  • Subrahmanyam, A., & Titman, S. (1999). The going-public decision and the development of financial markets. The Journal of Finance, 54(3), 1045–1082. https://doi.org/10.1111/0022-1082.00136
  • Takahashi, H., & Yamada, K. (2015). IPOs, growth, and the impact of relaxing listing requirements. Journal of Banking and Finance, 59, 505–519. https://doi.org/10.1016/j.jbankfin.2015.04.029
  • Yeldan, A. E., & Ünüvar, B. (2015). An assessment of the Turkish economy in the AKP era. Research and Policy on Turkey, 1(1), 11–28. https://doi.org/10.1080/23760818.2015.1099779
  • Zingales, L. (2000). In search of new foundations. Journal of Finance, 55(4), 1623–1653. https://doi.org/10.1111/0022-1082.00262
There are 29 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Ahmet Usta 0000-0001-9899-8072

Publication Date October 7, 2021
Submission Date January 14, 2021
Published in Issue Year 2021

Cite

APA Usta, A. (2021). The Impact of Going Public on Firm-Level Employment: Evidence from IPO Listed Firms on BIST. Istanbul Business Research, 50(2), 331-357. https://doi.org/10.26650/ibr.2021.50.861504

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