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The JOBS Act and IPO volume: Evidence that disclosure costs affect the IPO decision

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  • Dambra, Michael
  • Field, Laura Casares
  • Gustafson, Matthew T.

Abstract

In April 2012, the Jumpstart Our Business Startups Act (JOBS Act) was enacted to help revitalize the initial public offering (IPO) market, especially for small firms. During the year ending March 2014, IPO volume and the 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 the 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.

Suggested Citation

  • Dambra, Michael & Field, Laura Casares & Gustafson, Matthew T., 2015. "The JOBS Act and IPO volume: Evidence that disclosure costs affect the IPO decision," Journal of Financial Economics, Elsevier, vol. 116(1), pages 121-143.
    • Handle: RePEc:eee:jfinec:v:116:y:2015:i:1:p:121-143
    DOI: 10.1016/j.jfineco.2014.11.012
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    More about this item

    Keywords

    JOBS Act; IPO; Disclosure; Biotech;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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