Keywords

public ownership, local economic growth, geographic diversification

Abstract

We provide evidence that a firm’s transition from private to public ownership stunts local economic growth, especially in less populated and poorer areas. After accounting for endogeneity in the ownership decision, areas hosting companies that go public experience muted growth in employment, establishments, population, and wages, relative to areas where firms file to go public and remain private. Establishment-level analyses reveal that transitioning to public ownership causes firms to geographically diversify their establishments and employee base. These findings are consistent with public ownership reducing a firm’s reliance on local agglomeration economies, to the detriment of the local community.

Original Publication Citation

Jess Cornaggia, Matthew Gustafson, Jason Kotter, Kevin Pisciotta, Initial public offerings and the local economy: evidence of crowding out, Review of Finance, Volume 28, Issue 4, July 2024, Pages 1245–1273, https://doi.org/10.1093/rof/rfae011

Document Type

Peer-Reviewed Article

Publication Date

2018

Publisher

Review of Finance

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Assistant Professor

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