Do the Burdens to Being Public Affect the Investment and Innovation of Newly Public Firms?

We examine how regulatory burdens affect the investment and innovation of newly public firms. To do so, we exploit the Jumpstart Our Business Startups (JOBS) Act, which eliminates certain disclosure, auditing, and governance requirements for a subset of newly public firms. Firms treated with these r...

Full description

Saved in:
Bibliographic Details
Published in:Management science 2021-01, Vol.67 (1), p.594-616
Main Authors: Dambra, Michael, Gustafson, Matthew
Format: Article
Language:English
Subjects:
Audits
Companies
Corporate governance
Disclosure
Governance
innovation
Innovations
Investment
Investments
IPO
JOBS Act
mandatory disclosure
Public companies
Regulation
research and development
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We examine how regulatory burdens affect the investment and innovation of newly public firms. To do so, we exploit the Jumpstart Our Business Startups (JOBS) Act, which eliminates certain disclosure, auditing, and governance requirements for a subset of newly public firms. Firms treated with these reduced burdens invest more and more efficiently after going public relative to untreated firms. These findings are concentrated in innovative investments and are nonexistent in dual-class firms. Overall, our findings suggest that the burdens to being public exacerbate agency frictions, which lead managers to take on fewer risky projects. This paper was accepted by Suraj Srinivasan, accounting .
ISSN:0025-1909
1526-5501
DOI:10.1287/mnsc.2019.3436