Firm size and the impact of securities regulation

Using a newly-assembled dataset of 45,220 firms across 46 countries spanning the years 1996–2007, we find incongruent effects of regulation across firm size. We find that public enforcement facilitates small firm security issuance, while private enforcement benefits large firms more than small firms. However, once small firms access equity markets, private enforcement enhances the amount of equity capital raised in domestic markets. Stronger public enforcement gives rise to larger firms raising capital internationally. Comprehensively, results suggest that public (private) enforcement is more (less) consequential to firm-level access to capital than previously believed.