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Jumpstart our SPAC IPOs? Unintended consequences of the JOBS Act

Author

Listed:
  • Danial Hemmings

    (University of Sharjah)

  • Aziz Jaafar

    (University of Sharjah
    Bangor University)

Abstract

Prior to the JOBS Act of 2012, being acquired by a Special Purpose Acquisition Company (SPAC) was viewed as a cheaper and quicker way for companies to go public compared with a conventional IPO. The reduced disclosure and compliance provisions of the JOBS Act, however, were intended to level the field by reducing the direct costs associated with conducting IPOs. Despite this, SPAC activity has surged in the years since JOBS. We contribute to understanding this unintended consequence by showing that while JOBS did not result in reduced issuance costs for conventional IPOs, the direct costs to sponsors of SPAC IPOs reduced significantly. We confirm the robustness of this principal result using a difference-in-difference analysis. Since SPACs have no underlying operations at the time of IPO, they are particularly well poised to exploit the JOBS Act provisions, reducing costs and increasing attractiveness to SPAC sponsors. We also report that post-IPO performance of SPACs has worsened in the post-JOBS era, indicating that the revived IPO market may have adversely affected SPAC investment opportunities.

Suggested Citation

  • Danial Hemmings & Aziz Jaafar, 2025. "Jumpstart our SPAC IPOs? Unintended consequences of the JOBS Act," Journal of Asset Management, Palgrave Macmillan, vol. 26(3), pages 333-343, May.
  • Handle: RePEc:pal:assmgt:v:26:y:2025:i:3:d:10.1057_s41260-025-00399-y
    DOI: 10.1057/s41260-025-00399-y
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    References listed on IDEAS

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    More about this item

    Keywords

    SPAC; JOBS Act; IPO; Issuance costs; Listing regulation;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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