The Jobs Act and the Costs of Going Public

Posted: 13 Nov 2017

See all articles by Susan Chaplinsky

Susan Chaplinsky

University of Virginia - Darden School of Business

Kathleen Weiss Hanley

Lehigh University - College of Business

S. Katie Moon

University of Colorado at Boulder - Leeds School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2017

Abstract

We examine the effects of Title I of the Jumpstart Our Business Startups Act for a sample of 312 emerging growth companies (EGCs) that filed for an initial public offering (IPO) from April 5, 2012 through April 30, 2015. We find no reduction in the direct costs of issuance, accounting, legal, or underwriting fees for EGC IPOs. Underpricing, an indirect cost of issuance that increases an issuer's cost of capital, is significantly higher for EGCs compared to other IPOs. More importantly, greater underpricing is present only for larger firms that are newly eligible for scaled disclosure under the Act. Overall, we find little evidence that the Act in its first three years has reduced the measurable costs of going public. Although there are benefits of the Act that issuers appear to value, they should be balanced against the higher costs of capital that can occur after its enactment.

Keywords: IPOs; JOBS Act; Disclosure; Regulation; Underpricing

JEL Classification: D82; G24; G32; G38; M41

Suggested Citation

Chaplinsky, Susan J. and Hanley, Kathleen Weiss and Moon, Katie, The Jobs Act and the Costs of Going Public (September 1, 2017). Journal of Accounting Research, Vol. 55, No. 4, 2017, Available at SSRN: https://ssrn.com/abstract=3068967

Susan J. Chaplinsky (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4810 (Phone)
434-243-7676 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/chaplinsky.htm

Kathleen Weiss Hanley

Lehigh University - College of Business ( email )

Bethlehem, PA 18015
United States

Katie Moon

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

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