Going Public and the Internal Organization of the Firm

Bias D, Lochner B, Obernberger S, Sevilir M (2025)

Publication Type: Journal article

Publication year: 2025

Journal

Journal of Finance Wiley-Blackwell: No OnlineOpen

Article Number: jofi.70012

Abstract

This paper examines how initial public offerings (IPOs) affect firms' internal organization. We find that IPO firms become more hierarchical and standardized organizations, characterized by additional layers, more managers, smaller control spans, and larger administrative functions. These changes occur mostly in preparation for the IPO and can be only partially explained by growth. IPO firms with greater human capital risk experience larger hierarchical changes. Hierarchical changes help firms standardize employee roles and formalize internal processes. Our results suggest that firms reorganize to reduce their dependence on key individuals' human capital when transitioning to public markets.

Authors with CRIS profile

Benjamin Lochner Lehrstuhl für Volkswirtschaftslehre, insbesondere Makroökonomik

How to cite

APA:

Bias, D., Lochner, B., Obernberger, S., & Sevilir, M. (2025). Going Public and the Internal Organization of the Firm. Journal of Finance. https://doi.org/10.1111/jofi.70012

MLA:

Bias, Daniel, et al. "Going Public and the Internal Organization of the Firm." Journal of Finance (2025).

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