The effects of stricter regulation on the going public decision of small and knowledge-intensive firms |
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Authors: | Peter-Jan Engelen Michele Meoli Andrea Signori Silvio Vismara |
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Affiliation: | 1. Utrecht University, the Netherlands University of Antwerp, Belgium;2. Department of Management, Information and Production Engineering, University of Bergamo, Italy;3. Catholic University of Milan, Italy |
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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. |
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Keywords: | Europe IPOs regulation SOX underpricing valuation G30 G38 |
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