Informing Entrepreneurs: Public Corporate Disclosure and New Business Formation

John Barrios, Jung Ho Choi, Yael Hochberg (), Jinhwan Kim () and Miao Liu ()
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Yael Hochberg: Rice University - Jones Graduate School of Business
Jinhwan Kim: Stanford University - Stanford Graduate School of Business

No 2020-92, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: We examine the relationship between public firm disclosure and aggregate new business formation. Consistent with the notion that public company disclosures provide information spillovers that reduce the extent of uncertainty about new investment opportunities, we find that increased public firm presence is positively associated with new business formation in an industry. Furthermore, using plausibly exogenous information shocks generated by new IPOs in a geographic area, we find that post-IPO, new business registration in the public company's geographic area rise by 4 to 10%, consistent with soft information channels serving to reinforce hard information in public disclosures. New IPOs are associated with significant increases in Edgar downloading activity in the IPOs’ geographic area, consistent with the notion that public firm disclosures are providing important investment opportunity information that facilitates new business formation.

Keywords: Entrepreneurship; financial disclosures; real effects; externalities; IPOs (search for similar items in EconPapers)
JEL-codes: D80 D81 D83 L26 M41 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2020
New Economics Papers: this item is included in nep-ent, nep-fdg and nep-sbm
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https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_202092.pdf (application/pdf)

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Working Paper: Informing Entrepreneurs: Public Corporate Disclosure and New Business Formation (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bfi:wpaper:2020-92

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