How the Jobs Act is Reshaping IPOs: Implications for Entrepreneurial Firms

Abstract

The Jumpstart Our Business Startups (JOBS) Act was signed into law on April 5th, 2012. A key objective of the act was to allow new ventures in the United States to go public and raise growth capital more easily and cost-effectively than before. The aim of this paper is to discuss the implications of the JOBS Act for initial public offerings (IPOs). We argue that the JOBS Act gives rise to important spillover effects that may create ambiguous consequences for IPOs. The central question is whether the JOBS Act’s mandate of facilitating fund raising can come to fruition and, if so, which features of the Act may shift capital markets in entrepreneurship. Our paper begins to address this question and aims to serve as a catalyst for future academic work in this area.