The Effects of Stricter Regulation on the Going Public Decision of Small and Knowledge‐Intensive Firms

30 Pages Posted: 27 May 2020

See all articles by Peter‐Jan Engelen

Peter‐Jan Engelen

Utrecht University

Michele Meoli

University of Bergamo

Andrea Signori

Catholic University of Milan

Silvio Vismara

University of Bergamo

Date Written: January/February 2020

Abstract

This paper studies the impact of increased securities regulation on the IPOs of small and high‐tech, knowledge‐intensive firms. We take advantage of the adoption of European SOX‐like provisions, staggered at different dates across European countries, to test its influence on the going public decision. Starting from the population of European private firms during 1995–2012, we find that the likelihood of going public has decreased among small and high‐tech, knowledge‐intensive firms. Consistently, we document a 6% and 8.5% decrease in the industry‐adjusted Tobin's Q of small and knowledge‐intensive firms that go public after the regulatory change.

Keywords: Europe, IPOs, regulation, SOX, underpricing, valuation

JEL Classification: G30, G38

Suggested Citation

Engelen, Peter‐Jan and Meoli, Michele and Signori, Andrea and Vismara, Silvio, The Effects of Stricter Regulation on the Going Public Decision of Small and Knowledge‐Intensive Firms (January/February 2020). Journal of Business Finance & Accounting, Vol. 47, Issue 1-2, pp. 188-217, 2020, Available at SSRN: https://ssrn.com/abstract=3605623 or http://dx.doi.org/10.1111/jbfa.12417

Peter‐Jan Engelen (Contact Author)

Utrecht University

Vredenburg 138
Utrecht, 3511 BG
Netherlands

Michele Meoli

University of Bergamo ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
+390352052026 (Phone)
+390352052077 (Fax)

Andrea Signori

Catholic University of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Silvio Vismara

University of Bergamo ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
00390352052352 (Phone)
0039035562779 (Fax)

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