Improving the Legal Environment for Start-Up Financing by Rationalizing Rule 144

38 Pages Posted: 3 Aug 2004

See all articles by Mira Ganor

Mira Ganor

University of Texas at Austin - School of Law

Abstract

Private equity is a crucial source of financing for start-ups and, therefore, important for innovation and economic growth. The securities laws have an enormous impact on the ability of start-ups to obtain private equity investment. One of the most important of these laws is the SEC's Rule 144. Surprisingly, there has been little academic analysis on the efficacy of this rule. This paper shows that Rule 144 is likely to impair and distort the financing of start-ups. The paper also explains how Rule 144 can be modified to reduce these costs without interfering with any of the functions for which it was designed.

Keywords: Securities regulations, private equity, suboptimal investment, Rule 144

JEL Classification: K22, G32, G38, G24, G11, M14

Suggested Citation

Ganor, Mira, Improving the Legal Environment for Start-Up Financing by Rationalizing Rule 144. Available at SSRN: https://ssrn.com/abstract=572021 or http://dx.doi.org/10.2139/ssrn.572021

Mira Ganor (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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