Time to acquire: Regulatory burden and M&A activity

Attila Balogh, Usha Creedy and Danika Wright

International Review of Financial Analysis, 2022, vol. 82, issue C

Abstract: Firms go public to make acquisitions, but private firms benefit from lower regulatory cost. Investment by newly public firms may be limited if managers need to focus on compliance instead of growth. Exploiting a 2012 US policy reform, we show that when regulatory cost is lower, firms make more acquisitions, do so more quickly after listing, and also increase other forms of investment. Examining potential unintended consequences of reduced regulation, we find that opportunistic bidding arising from higher information asymmetry does not explain these results. We inform the ongoing policy debate on broadening the scale and scope of regulatory relief.

Keywords: Initial public offerings; Acquisitions; Mergers; Regulatory cost (search for similar items in EconPapers)
JEL-codes: G34 G38 L51 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:82:y:2022:i:c:s1057521922000254

DOI: 10.1016/j.irfa.2022.102047

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