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Informing Entrepreneurs: Public Corporate Disclosure and New Business Formation

Author

Listed:
  • John M. Barrios

    (University of Chicago - Booth School of Business)

  • Jung Ho Choi

    (Stanford University - Stanford Graduate School of Business)

  • Yael V. Hochberg

    (Rice University - Jones Graduate School of Business)

  • Jinhwan Kim

    (Stanford University - Stanford Graduate School of Business)

  • Miao Liu

    (University of Chicago - Booth School of Business)

Abstract

We examine the relationship between public firm disclosure and aggregate new business formation. Consistent with the notion that public company disclosures provide information spillovers that reduce the extent of uncertainty about new investment opportunities, we find that increased public firm presence is positively associated with new business formation in an industry. Furthermore, using plausibly exogenous information shocks generated by new IPOs in a geographic area, we find that post-IPO, new business registration in the public company's geographic area rise by 4 to 10%, consistent with soft information channels serving to reinforce hard information in public disclosures. New IPOs are associated with significant increases in Edgar downloading activity in the IPOs’ geographic area, consistent with the notion that public firm disclosures are providing important investment opportunity information that facilitates new business formation.

Suggested Citation

  • John M. Barrios & Jung Ho Choi & Yael V. Hochberg & Jinhwan Kim & Miao Liu, 2020. "Informing Entrepreneurs: Public Corporate Disclosure and New Business Formation," Working Papers 2020-92, Becker Friedman Institute for Research In Economics.
    • Handle: RePEc:bfi:wpaper:2020-92
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Entrepreneurship; financial disclosures; real effects; externalities; IPOs;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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