JOBS Act Spillover Effects in the Syndicated Loan Market

Abstract

The JOBS Act directly affects access to public equity for emerging growth companies (EGCs) by lowering regulatory requirements to conduct initial public offerings (IPOs). Indirectly, improved access to equity markets may alter how other capital providers engage with EGC firms, which may further accelerate EGC firm growth, regardless of and prior to IPO. Using regression discontinuity, we find syndicated loans to EGCs have lower credit spreads, less collateral, larger revolvers, and greater bank participation. These results suggest the JOBS Act not only has a direct effect via IPO access, but also indirectly enhances EGCs’ access to the syndicated loan market.

Keywords: JOBS Act, Syndicated Lending, Initial Public Offering, Loan, Bank Relationship

JEL Classification: G21, G24, G32, G38, K22