The Impact of Initial Public Offerings on the Housing Market and Employment in the United States

Abstract

Initial public offerings (IPO) have always been widely discussed news by analysts, economists, the media, and the general public. With 2021 being the record year for IPOs, as more than 1,000 companies have gone public last year in the United States alone, IPOs have never been as relevant of a topic as ever. This paper investigates the impact of IPO events on the US growth rate of housing prices and levels of employment from the years 2000 to 2021. Through utilizing an ordinary least squares regression, I found that an increase in both the amount of IPO proceeds (the amount the company goes public for) and the number of total IPOs (the number of companies that go public) results in an increase in the growth rate of house prices and the level of employment in a given state within the United States. I also found that the growth rate of house prices increases more for expensive houses in the high-tier price category than for less expensive houses from the low-tier. This paper proposes to add to literature on the macro impact of IPO events on the housing market and employment at a state-level instead of just at a micro impact at the firm-level. While prior literature has investigated the impact of IPO events on the San Francisco Bay Area community, there is still limited information on the impact of IPOs in all other given states in the US. Literature can also still expand on the impact of IPOs on the level of employment outside of just the effect on the firm-level human capital. This paper further aims to establish the significant implications of what may occur to the housing market and employment in a given state when a company that goes public has headquarters in the region.