The JOBS Act and IPO Volume: Evidence that Disclosure Costs Affect the IPO Decision
51 Pages Posted: 28 Jun 2014 Last revised: 23 Nov 2016
Date Written: August 26, 2014
In April 2012, the JOBS Act was passed to help revitalize the IPO market, especially for small firms. During the year ending March 2014, IPO volume and proportion of small firm issuers was the largest since 2000. Controlling for market conditions, we estimate that the JOBS Act has led to 21 additional IPOs annually, a 25% increase over pre-JOBS levels. Firms with high proprietary disclosure costs, such as biotechnology and pharmaceutical firms, increase IPO activity most. These firms are also more likely to take advantage of the Act’s de-risking provisions, allowing firms to file the IPO confidentially while testing-the-waters.
Keywords: JOBS Act, Initial Public Offering, disclosure, proprietary costs, pre-IPO marketing
JEL Classification: D82, M41, G24, G32, G38
Suggested Citation: Suggested Citation