 The Costs and Benefits of Mandatory Securities Regulation: Evidence from Market Reactions to the JOBS Act of 2012Dhammika Dharmapala and Vikramaditya Khanna Journal of Law, Finance, and Accounting, 2016, vol. 1, issue 1, 139-186 Abstract: The effect of mandatory securities regulation on firm value has been a long-standing concern across law, economics, finance, and accounting. The Jumpstart Our Business Startups (JOBS) Act relaxed disclosure and compliance obligations under US securities law for a new category of firms known as “emerging growth companies†(EGCs). EGCs were defined retroactively to include firms that conducted initial public offerings (IPOs) between December 8, 2011, and the enactment of the Act on April 5, 2012. We analyze market reactions for EGCs around key legislative events in March 2012, relative to a control group of otherwise similar firms that conducted IPOs in the months preceding the cutoff date. We find positive and statistically significant abnormal returns of between 3% and 4% for EGCs around the most important of these dates. This suggests that the value to investors of the disclosure and compliance obligations relaxed under the JOBS Act is outweighed by the associated compliance costs. Keywords: Securities regulation; JOBS Act of 2012; Emerging growth companies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:now:jnllfa:108.00000004 Access Statistics for this article More articles in Journal of Law, Finance, and Accounting from now publishers |
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