Description:
This paper investigates investment behavior across public and privately held firms using a novel firm-level dataset. We use coarsened exact matching to construct a control group of firms with which we compare listed firms before and after listing in a difference-in-differences framework. The results reveal that stock market listing spurs growth significantly in terms of sales, employment and assets for manufacturing firms. Furthermore, they indicate that listed manufacturing firms invest more than their non-listed counterparts. In addition, their investment decisions are significantly more sensitive to changes in investment opportunities, and they respond more aggressively. These results constitute evidence rejecting the existence of short-termism for listed manufacturing firms in Turkey, and also highlight the importance of financial development in increasing employment, firm growth and allocating capital efficiently.