The Impact of the JOBS Act on M&A

The Jumpstart Our Business Startups (JOBS) Act, enacted in April 2012, was designed to make it cheaper for emerging growth companies (EGCs) to access capital and, by weakening disclosure requirements, easier for them to conduct initial public offerings (IPOs). Its impact on EGCs has been a focus of academic literature in accounting and finance, with Chaplinsky et al. (2017) showing that the act increases indirect costs for some EGC IPOs because of increased information asymmetry between the firm and potential shareholders. The upshot is that small private firms may prefer to be directly acquired rather than engage in an IPO.… Read more