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The effects of stricter regulation on the going public decision of small and knowledge‐intensive firms
Author(s) -
Engelen PeterJan,
Meoli Michele,
Signori Andrea,
Vismara Silvio
Publication year - 2020
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/jbfa.12417
Subject(s) - initial public offering , high tech , business , population , test (biology) , accounting , industrial organization , political science , biology , demography , sociology , law , paleontology
This paper studies the impact of increased securities regulation on the IPOs of small and high‐tech, knowledge‐intensive firms. We take advantage of the adoption of European SOX‐like provisions, staggered at different dates across European countries, to test its influence on the going public decision. Starting from the population of European private firms during 1995–2012, we find that the likelihood of going public has decreased among small and high‐tech, knowledge‐intensive firms. Consistently, we document a 6% and 8.5% decrease in the industry‐adjusted Tobin's Q of small and knowledge‐intensive firms that go public after the regulatory change.