Disclosure, Firm Growth, and the JOBS Act

Anantha Divakaruni and Howard Jones

No 3zumb, SocArXiv from Center for Open Science

Abstract: We study the effects of regulatory disclosure on investment and growth by comparing newly public firms before and after they lose disclosure exemptions under the Jumpstart Our Business Startups (JOBS) Act. Exempt firms invest more in physical assets, innovation, and acquisitions than firms that lose exemptions, but experience steeper declines in growth opportunities over time. Firms that lose exemptions exhibit better allocation of equity to investments and utilization of existing assets, which improves their Tobin’s q. Relaxing disclosure requirements seems to induce inefficiencies in managerial investment decisions and hence inhibits firms from exploiting or replenishing their growth opportunities.

Date: 2021-05-23
New Economics Papers: this item is included in nep-ent, nep-ino and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:3zumb

DOI: 10.31219/osf.io/3zumb

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