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

See all articles by Michael Dambra

Michael Dambra

SUNY at Buffalo - School of Management

Laura Casares Field

University of Delaware - Alfred Lerner College of Business and Economics

Matthew Gustafson

Pennsylvania State University - Smeal College of Business

Date Written: August 26, 2014

Abstract

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

Dambra, Michael and Field, Laura Casares and Gustafson, Matthew, The JOBS Act and IPO Volume: Evidence that Disclosure Costs Affect the IPO Decision (August 26, 2014). Journal of Financial Economics (JFE), Vol. 116, p. 121-143, 2015. Available at SSRN: https://ssrn.com/abstract=2459591 or http://dx.doi.org/10.2139/ssrn.2459591

Michael Dambra (Contact Author)

SUNY at Buffalo - School of Management ( email )

354 Jacobs Management Center
Buffalo, NY 14260-1660
United States
716-645-3237 (Phone)

Laura Casares Field

University of Delaware - Alfred Lerner College of Business and Economics ( email )

419 Purnell Hall
Newark, DE 19716
United States
302-831-3810 (Phone)

Matthew Gustafson

Pennsylvania State University - Smeal College of Business ( email )

East Park Avenue
University Park, PA 16802
United States

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