Can Lowering the Bar Revive Public Markets? Evidence from the JOBS Act

96 Pages Posted: 20 Nov 2019 Last revised: 4 Sep 2020

See all articles by Anantha Divakaruni

Anantha Divakaruni

University of Bergen

Howard Jones

University of Oxford, Saïd Business School

Date Written: August 28, 2020

Abstract

The Jumpstart Our Business Startups (JOBS) Act has not led to a sustained recovery in IPO activity, but to poorer-quality firms raising public equity. Firms going public under the Act are largely cash-starved, pay dearly to raise equity, and often rely on further public issues to avert financial distress. Proceeds raised are used to do more hiring, repay debt, and boost executive pay, but not to increase investments. Many firms lose exemptions sooner than allowed by the Act, whereupon they face higher compliance costs. The JOBS Act has not revived public equity markets and may have even undermined their attractiveness.

Keywords: JOBS Act, Initial public offering, Regulation, Equity financing

JEL Classification: G14, G24, G28, G32

Suggested Citation

Divakaruni, Anantha and Jones, Howard, Can Lowering the Bar Revive Public Markets? Evidence from the JOBS Act (August 28, 2020). Available at SSRN: https://ssrn.com/abstract=3489404 or http://dx.doi.org/10.2139/ssrn.3489404

Anantha Divakaruni (Contact Author)

University of Bergen ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

Howard Jones

University of Oxford, Saïd Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/about-us/people/howard-jones

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