The effects of stricter regulation on the going public decision of small and knowledge-intensive firms
Publication date
2020-01-01
Authors
Engelen, Peter-Jan
Meoli, Michele
Signori, Andrea
Vismara, Silvio
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Document Type
Article
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taverne
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.
Keywords
Europe, G30, G38, IPOs, regulation, SOX, underpricing, valuation, Taverne, Accounting, Business, Management and Accounting (miscellaneous), Finance, SCI and SSCI Journals
Citation
Engelen, P J, Meoli, M, Signori, A & Vismara, S 2020, 'The effects of stricter regulation on the going public decision of small and knowledge-intensive firms', Journal of Business Finance and Accounting, vol. 47, no. 1-2, pp. 188-217. https://doi.org/10.1111/jbfa.12417