John Barrios

1 Introduction The study of initial public offerings (IPOs) has generated an extensive literature over the past several decades. Early research focused on the direct consequences for firms going public, including reductions in innovation (Bernstein [2015]), greater acquisition activity (Celikyurt, Sevilir, and Shivdasani [2010]), employee departures (Babina, Ouimet, and Zarutskie [2025]), and changes in employment growth (Borisov, Ellul, and Sevilir [2021]).

Let’s say, for the sake of argument, that you wanted to commit large-scale fraud at your company. Manipulating financial statements or inflating revenue to mislead investors would be difficult to pull off alone. You would likely need others to align stories, suppress dissent, and sustain the deception over time. And your colluders would likely be colleagues whom you’d come to trust after months or years of watercooler chats and after-work drinks. “Most fraud is a team sport,” says Prof. John Barrios.

In new research, John M. Barrios and Inna Abramova show how private equity’s rising involvement in accounting and other professions is concentrating markets and breaking down barriers to conflicts of interest. Firms in professions like accounting and law have traditionally operated differently from ordinary businesses. Ownership was limited to licensed professionals, firms were run as partnerships, and outside investors were kept away to uphold higher standards of independence and trust.