Tuesday, April 15, 2014
Carlos Berdejo has posted Going Public After the JOBS Act on SSRN with the following abstract:
The Jumpstart Our Business Startups Act of 2012 (JOBS Act) represents one of the most comprehensive overhauls of the securities laws in recent years. The principal legislative goal of the JOBS Act is to improve the access to the capital markets for smaller issuers, which are referred to in the act as emerging growth companies, or EGCs. To accomplish this goal, the JOBS Act seeks to reduce the costs of conducting a public offering and complying with the ensuing reporting obligations by making certain disclosure requirements voluntary for EGCs. This Article examines whether these scaled disclosure rules have increased the number of small issuers conducting an initial public offering (IPO) of their equity securities and the extent to which these issuers have taken advantage of the various exemptions available to them under the JOBS Act.
The evidence presented in this Article indicates that EGCs have increasingly taken advantage of several of the scaled disclosure provisions of the JOBS Act during the course of their IPOs. However, the number of EGCs accessing the public capital markets has not increased as a result. The Article explores two explanations for these seemingly contradictory findings. First, the evidence suggests that the direct costs of conducting an IPO have not decreased for EGCs and that some indirect costs may have increased following the enactment of the JOBS Act. Second, certain issuers that qualify for EGC status (particularly the largest ones) may be choosing to pursue private offerings instead. EGCs that take advantage of the scaled financial disclosure available under the JOBS Act are smaller, younger and more likely to belong to R&D-intensive industries, a pattern supporting the adoption of a more flexible securities regulation framework that allows issuers to select from a menu of disclosure regimes.