Factors Associated with Bank Deregistration Following the 2012 JOBS Act

59 Pages Posted: 5 Mar 2013 Last revised: 29 Jun 2013

See all articles by Richard M. Frankel

Richard M. Frankel

Washington University in Saint Louis - Olin Business School

Joshua A. Lee

University of Georgia

Xiumin Martin

Washington University in Saint Louis - Olin School of Business

Date Written: February 1, 2013

Abstract

The 2012 JOBS Act increases the deregistration threshold for banks from 300 to 1200 shareholders of record. Our purpose is to understand whether the banks’ deregistration decision reflects an effort by slow growing banks to reduce excess compliance costs and/or whether the decision is associated with an attempt by corporate insiders to increase private benefits. The Act permits a set of banks to deregister with minimal transition costs and can thereby encourage deregistrations in the pursuit of limited private benefits. We find post-JOBS Act deregistrations differ from prior deregistrations. Unlike prior deregistrations, banks that deregister after the JOBS Act do not display a significant reduction in shareholders immediately prior to deregistration. Moreover, banks deregistering after the Act have significantly lower institutional ownership, more insider trading and insider loans, and do not display significantly lower asset growth. In contrast to positive returns during pre-JOBS Act deregistration announcements, announcement returns for post-JOBS Act deregistrations are insignificant. By reducing the costs of deregistration, our results suggest the Act allowed banks to capture private benefits while increasing the attractiveness of deregistration for higher growth banks.

Keywords: deregistration, private benefits, JOBS Act

JEL Classification: G14, G21, G24, G28

Suggested Citation

Frankel, Richard M. and Lee, Joshua A. and Martin, Xiumin, Factors Associated with Bank Deregistration Following the 2012 JOBS Act (February 1, 2013). Available at SSRN: https://ssrn.com/abstract=2228420 or http://dx.doi.org/10.2139/ssrn.2228420

Richard M. Frankel

Washington University in Saint Louis - Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Joshua A. Lee

University of Georgia ( email )

Athens, GA
United States

Xiumin Martin (Contact Author)

Washington University in Saint Louis - Olin School of Business ( email )

Saint Louis, MO 63130
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
125
rank
221,904
Abstract Views
905
PlumX Metrics