Finance and Accounting Research Seminar with Professor Merih Sevilir

Title: Going Public and the Internal Organization of the Firm

Abstract:
We examine how firms adapt their organization when they go public. IPO firms transform
into a more hierarchical organization and increase managerial oversight. Organizational
functions dedicated to accounting, finance, information technology, and human resources
become more prominent. IPO firms turn around a large chunk of their labor force and
almost their entire management to adapt their human capital to the new organization.
The new organization facilitates internal transfers and job promotions. Overall, going
public succumbs the firm to a transformation which reduces the firm’s dependence on
individual employees and efficiently organizes the production process of a public firm.