The Burden of Being Public: Evidence from Local Labor Markets

• In Event: Securities Regulation - III

Abstract

We exploit rich panel data on employment across occupations and quasi-natural variation based on IPO completion to quantify the direct labor cost of regulatory compliance for public companies. We find that IPOs have no effect on local employment, on average, but we precisely estimate a small employment effect for accounting and auditor occupations. We estimate that the annual labor cost of regulatory compliance is less than $1M for the average public firm, but also is highly sensitive to capital markets regulation. Our estimates cannot reconcile firm's self-reported regulatory burden and removes labor costs from the list of first order listing status determinants.

Authors

• Andrew Bird, Carnegie Mellon University

• Stephen Adam Karolyi, Carnegie Mellon University

• Thomas Ruchti, Carnegie Mellon University