Jumpstart our SPAC IPOs? Unintended consequences of the JOBS Act

Danial Hemmings () and Aziz Jaafar ()
Additional contact information
Danial Hemmings: University of Sharjah
Aziz Jaafar: University of Sharjah

Journal of Asset Management, 2025, vol. 26, issue 3, No 6, 333-343

Abstract: Abstract Prior to the JOBS Act of 2012, being acquired by a Special Purpose Acquisition Company (SPAC) was viewed as a cheaper and quicker way for companies to go public compared with a conventional IPO. The reduced disclosure and compliance provisions of the JOBS Act, however, were intended to level the field by reducing the direct costs associated with conducting IPOs. Despite this, SPAC activity has surged in the years since JOBS. We contribute to understanding this unintended consequence by showing that while JOBS did not result in reduced issuance costs for conventional IPOs, the direct costs to sponsors of SPAC IPOs reduced significantly. We confirm the robustness of this principal result using a difference-in-difference analysis. Since SPACs have no underlying operations at the time of IPO, they are particularly well poised to exploit the JOBS Act provisions, reducing costs and increasing attractiveness to SPAC sponsors. We also report that post-IPO performance of SPACs has worsened in the post-JOBS era, indicating that the revived IPO market may have adversely affected SPAC investment opportunities.

Keywords: SPAC; JOBS Act; IPO; Issuance costs; Listing regulation (search for similar items in EconPapers)
JEL-codes: G24 G32 G38 M41 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41260-025-00399-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:assmgt:v:26:y:2025:i:3:d:10.1057_s41260-025-00399-y

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/41260

DOI: 10.1057/s41260-025-00399-y

Access Statistics for this article

Journal of Asset Management is currently edited by Marielle de Jong and Dan diBartolomeo

More articles in Journal of Asset Management from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().