Going Public After the JOBS Act

Carlos Berdejo

Loyola Law School Los Angeles

March 1, 2014

76 Ohio St. L.J. ___, Forthcoming
Loyola-LA Legal Studies Paper No. 2014-28

The Jumpstart Our Business Startups Act of 2012 (JOBS Act) represents one of the most comprehensive overhauls of the securities laws in recent years. The principal legislative goal of the JOBS Act is to improve the access to the capital markets for smaller issuers, which are referred to in the act as emerging growth companies, or EGCs. To accomplish this goal, the JOBS Act seeks to reduce the costs of conducting a public offering and complying with the ensuing reporting obligations by making certain disclosure requirements voluntary for EGCs. This Article examines whether these scaled disclosure rules have increased the number of small issuers conducting an initial public offering (IPO) of their equity securities and the extent to which these issuers have taken advantage of the various exemptions available to them under the JOBS Act.

The evidence presented in this Article indicates that EGCs have increasingly taken advantage of several of the scaled disclosure provisions of the JOBS Act during the course of their IPOs. However, the number of EGCs accessing the public capital markets has not increased as a result. The Article explores two explanations for these seemingly contradictory findings. First, the evidence suggests that the direct costs of conducting an IPO have not decreased for EGCs and that some indirect costs may have increased following the enactment of the JOBS Act. Second, certain issuers that qualify for EGC status (particularly the largest ones) may be choosing to pursue private offerings instead. EGCs that take advantage of the scaled financial disclosure available under the JOBS Act are smaller, younger and more likely to belong to R&D-intensive industries, a pattern supporting the adoption of a more flexible securities regulation framework that allows issuers to select from a menu of disclosure regimes.

Number of Pages in PDF File: 62

Keywords: JOBS Act, Initial Public Offerings (IPOs), Emerging Growth Companies (EGCs)

JEL Classification: K22, G28

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Date posted: April 11, 2014 ; Last revised: May 28, 2014

Suggested Citation

Berdejo, Carlos, Going Public After the JOBS Act (March 1, 2014). 76 Ohio St. L.J. ___, Forthcoming; Loyola-LA Legal Studies Paper No. 2014-28. Available at SSRN: http://ssrn.com/abstract=2423683

Contact Information

Carlos Berdejo (Contact Author)
Loyola Law School Los Angeles ( email )
919 Albany Street
Los Angeles, CA 90015-1211
United States
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