The effects of stricter regulation on the going public decision of small and knowledge-intensive firms

Peter Jan Engelen, Michele Meoli, Andrea Signori, Silvio Vismara*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

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.

Original languageEnglish
Pages (from-to)188-217
Number of pages30
JournalJournal of Business Finance and Accounting
Volume47
Issue number1-2
DOIs
Publication statusPublished - 1 Jan 2020

Keywords

  • Europe
  • G30
  • G38
  • IPOs
  • regulation
  • SOX
  • underpricing
  • valuation

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