Using regulatory shocks on the eligibility to issue seasoned equity offerings in China, we find that over the two-to-three years following SEOs, expenditures on technology-related tangible- and intangible assets increase, and low (high) skill workers decrease (increase). The decrease of low skill workers outnumbers the increase of high skill workers, resulting in a net decline in firm-level employment. The decline in employment is more extensive among firms investing more in technology after SEOs and among firms more financially constrained before SEOs. Within-firm average wages increase because of the higher skill composition of employees, but total wages remain unchanged because of the fewer remaining employees. Finally, SEOs substantially increase firm profitability and productivity, suggesting the changes to the inputs of production—a smaller and higher skilled workforce using newer technology, and with no increase in total wages—enhance firm performance. These findings illustrate how access to external financing can affect employment and firm performance by facilitating the adoption of productivity-improving technologies.​

Keywords: Equity Issuance, Employment, Technology Adoption, Skills, Wages, Firm Performance, Online Job Posting
JEL Classifications: G32, J21, J24, J31, L25.​