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

Michael Dambra, Laura Casares Field, Matthew T. Gustafson

Research output: Contribution to journalArticlepeer-review

54 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)121-143
Number of pages23
JournalJournal of Financial Economics
Volume116
Issue number1
DOIs
StatePublished - Apr 1 2015

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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