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JOBS Act: Has It Brought Back the IPO?
Marlin R. H. Jensen, Beverly B. Marshall, and John S. Jahera Jr.
I
markets executives
t has been more
Previous research has shown that initial public
at investment banks.
than two years since
offerings (IPOs) have plummeted in the United
There were three
President Obama
States from historic norms and that global firms
other possible catasigned the Jumpstart
lysts mentioned for
Our Business Startups
have stopped coming to the United States as well.
the recent increase
(JOBS) Act into law,
In 2012, President Obama signed the Jumpstart
in IPOs: low interon April 5, 2012. Title
Our Business Startups (JOBS) Act, whose purpose
est rates increasing
I of the JOBS Act was
was to improve access to public capital marinvestor demand
intended to reopen the
kets by alleviating or eliminating restrictions on
for higher yielding
American capital maremerging growth companies going public through
assets, increased
kets to emerging growth
an IPO. This, it was hoped, would increase job
confidence in the
companies (EGCs) by
creation and stimulate economic growth. This
U.S economy, and
allowing firms considstudy examines whether chief financial officers
positive IPO perforering an IPO to make
(CFOs) have started taking their firms public in
mance encouraging
less onerous disclosures.
the United States again and whether CFOs of
more businesses to
Rapoport (2012b)
global firms have reentered the U.S. market since
make offerings.
reports that 55% of
In a later surinvestment bank executhe passage of the JOBS Act. The article also
vey,
Kvitko (2014)
tives thought the JOBS
addresses whether global firms have reentered
reported,
from BDO
Act would increase
the U.S. market using dual-class shares in IPOs
USA,
that
followthe number of initial
to maintain control of the firms they have created.
ing
a
strong
year for
public offerings (IPOs)
© 2015 Wiley Periodicals, Inc.
IPOs overall in 2013,
on U.S. exchanges.
the majority of capiWalsh (2013) points to
tal market execua study done by BDO
In early 2014, Walsh (2014)
tives (73%) at investment banks
USA, LLP (a U.S. professional
quoted Wendy Hambleton, a
predicted an increase in IPOs in
services firm providing assurpartner in the Capital Mar2014, especially from the techance, tax, financial advisory,
kets Practice of BDO USA,
nology industry. In addition,
and consulting services) show“Investor optimism has finally
technology chief financial offiing that a majority of capital
cers (CFOs) believed the techmarkets executives at investment rebounded from the financial
crisis and the investment banknology sector would continue
banks believe the JOBS Act is
ing community is predicting
to accelerate in 2014; overall,
not having a positive impact on
even more deals and higher
93% of CFOs anticipated IPO
increasing the number of IPOs
proceeds in 2014.” However, the activity would remain the same
on U.S. exchanges. However,
catalyst for the increase in IPO
or increase in 2014. The ques28% believed it was too early to
evaluate the impact of the JOBS offerings in 2013 was not viewed tion is whether the JOBS Act is
as the JOBS Act by all capital
bringing about the IPO increase
Act.
© 2015 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI 10.1002/jcaf.22014
9
10
The Journal of Corporate Accounting & Finance / January/February 2015
through the more lenient disclosure regulation on EGCs or
whether it is simply other positive factors in the marketplace
leading to the increased IPO
activity.
Bushner (2012) points out
that foreign IPO issuers should
be interested in the U.S. market
after the passage of the JOBS
Act. He states that foreign issuers will benefit from Title I of
the JOBS Act through liberalized communications, accommodations in the IPO process,
and relief from certain disclosure obligations as a reporting company post IPO. If the
foreign company qualifies as an
EGC, the liberalized rules on
research reports apply to foreign
firms the same as U.S. domestic
firms.
Besides these changes, the
U.S. market has other features
that appeal to foreign issuers.
Demos (2014) points out that
the U.S. market is a deep retail
market, which basically guarantees that about 20% of an
IPO can be committed prior
to the road show. In addition,
investors in the United States
are more willing to buy an IPO
for growth potential and don’t
seem as worried about the leverage the firm has accumulated.
U.S. market investors are also
not as concerned about the issuing firm listing without having
turned a profit, and the U.S.
market offers far more liquidity
than most other capital markets.
In addition, some foreign companies are interested in maintaining control of their firm. A
number of foreign countries do
not allow an IPO with a dualclass structure, but the U.S. market does allow foreign issuers
to have a dual classification of
shares.
Since IPO activity fell off
dramatically in 2012, the hope
DOI 10.1002/jcaf
was that passage of the JOBS
Act would help bring back the
IPO market for both U.S. and
foreign firms. Bunge (2012)
quoted NYSE Euronext CEO
Duncan Niederauer saying
the early results of the JOBS
Act are very positive. However, Chasan (2013) reports a
BDO USA study showing that
only 14% of capital market
executives at investment banks
believe the JOBS Act is boosting the number of IPOs. Case
(2014) states the JOBS Act
self-executing IPO on-ramp is
making a real difference in the
number of firms going public.
He bases his view on reports
from Renaissance Capital that
103 companies had filed to go
public in the first few months of
2014. In addition, he reports on
a more recent survey by BDO
USA securities attorneys showing that 74% gave significant
credit to the JOBS Act for the
increase in IPO offerings. The
main reason given for the JOBS
Act’s being effective at increasing IPO offerings was the provision allowing simpler prefiling
disclosures.
Previous surveys done by
BDO USA and Renaissance
Capital have stated that the
JOBS Act either has helped or
has not helped in the process
of bringing back IPOs to the
marketplace. The objective of
this research is to look back to
see whether the JOBS Act has
indeed led to more companies,
both domestic and foreign,
going public or whether U.S.
market conditions brought back
the resurgence of IPOs in the
United States.
IPO TASK FORCE
In response to the declining number of companies
going public, the U.S. Treasury
Department in March 2011
formed the Access to Capital
Conference to research and
make recommendations on how
to make capital markets more
accessible to EGCs. EGCs were
defined as any nonreporting
issuer with total annual gross
revenue of less than $1 billion.
From this conference, the IPO
Task Force (2011) was created to
examine what caused the
IPO decline and to make recommendations to bring the EGCs
back to the public markets
through IPOs. As Kate Mitchell, chairman of the IPO Task
Force, stated, “The mandate
of the IPO Task Force was to
examine the root causes of the
current U.S. IPO crisis and
quickly develop reasonable and
actionable steps that can restore
access for emerging growth companies to the capital they need
to create jobs and expand their
businesses globally.”
The IPO Task Force concluded that there were likely a
number of regulatory actions
rather than just one event
that caused the IPO market to
decline. One event mentioned
by the Task Force was the end
of the “Four Horsemen” (i.e.,
the merger of the investment
banks Alex Brown, Montgomery Securities, Robertson Stephens, and Hambrecht & Quist
into banks) by 1999. These
investment banks were instrumental in helping smaller companies go public. Also listed
were Regulation Fair Disclosure in 2000, decimalization in
2001, Sarbanes-Oxley (SOX)
in 2002, the Global Settlement
in 2003, Regulation NMS
in 2005, Regulation NMS
in 2007, and Dodd-Frank in
2010. All these actions were
intended to help the individual
investor. However, many feel
that these events actually
© 2015 Wiley Periodicals, Inc.
The Journal of Corporate Accounting & Finance / January/February 2015
increased the burden for firms
trying to go public.
The final recommendations
of the IPO Task Force were
designed to alleviate these burdens. The main recommendations were to reduce regulatory
costs for EGCs trying to go
public and to increase the visibility of EGCs while maintaining transparency for investors.
The IPO Task Force argued that
this could be done without compromising investor protection or
disclosure.
JOBS ACT 2012
Based on the recommendations of the IPO Task Force and
the perceived need to reduce
barriers to growth and investment, the JOBS Act was enacted
in April 2012. The Task Force
showed that when EGCs go
public, research shows that more
than 90% of their job creation
happens subsequent to the IPO.
Under the JOBS Act, an
EGC is a company issuing
stock that has total annual
gross revenues of less than $1
billion during its most recent
completed fiscal year and that
has issued less than $1 billion in
debt securities. The effective date
for firms meeting the definition
was the first sale of registered
common stock after December 8, 2011 (Verschoor, 2012).
Ropoport (2012b) reports that
74% of investment bank executives believe the EGC exemption
will help CFOs decide whether
to take their firm public. Confidential submissions of draft
IPO registration statements and
amendments were not permitted for domestic issuers and for
only a limited number of foreign
issuers prior to the JOBS Act.
The JOBS Act now allows issuers to submit documents for
review prior to a public filing.
© 2015 Wiley Periodicals, Inc.
Before the JOBS Act, there was
limited ability to communicate
with investors about a securities offering, and now EGCs
can engage in communications
with investors. This provision
will allow companies to avoid
disclosing potentially sensitive
information to competitors.
The companies will still have
to release the financial documents 21 days before they try to
persuade institutional investors
to buy into the IPO during the
road show.
Prior to the JOBS Act,
underwriters of an IPO could
not publish research on the
issuer until 40 days after the
completion of the IPO, and
now research on an EGC can
be made any time. Communications by analysts with firms
issuing securities were restricted
while investment banking
representatives were present.
Under the JOBS Act, analysts
may meet with EGC management with other representatives
present. Title I of the JOBS
Act went on to relax auditor
attestation of effectiveness of
internal controls. In addition,
EGCs are not required to comply with new or revised financial
accounting standards or to
rotate audit partners every five
years, financial statements are
only needed for two years prior
to issuing securities rather than
three, executive compensation
disclosure requirements are
reduced, and EGCs do not need
to hold nonbinding advisory
shareholder votes on executive
compensation. These EGCs will
be given five years before being
subjected to the full weight of
federal regulation such as section 404 of SOX regarding the
redundant external audit of
internal audits of their business
processes. However, after the
five-year period, all companies
11
will have to comply with all regulations in place, and regulators
will still have antifraud enforcement authority when the firms
go public. The bottom line of
the JOBS Act was to scale back
prior regulation and ideally to
bring back IPO offerings to the
marketplace.
STATE OF THE IPO MARKET
Jensen, Marshall, and
Jahera (2012) report a decline in
IPO activity in the United States
as well as a decline in global
IPOs choosing to go public in
the United States through 2011
supporting a need for the JOBS
Act. Both studies argue that
IPOs in the United States were
declining due to U.S. exchanges
not being as competitive due
to relatively high listing costs
and the high compliance costs
of listing in the United States.
Stephens (2011) also points
out that the lack of IPOs in the
United States is due to the excessive regulation and compliance
and subsequent costs that are
required of public companies.
Scott (2011) discusses how these
high costs explain why U.S.
companies prefer to remain private and why foreign firms look
at other ways to raise funds in
the United States. Scott noted
that in 2010, 79.3% of the funds
raised in the United States by
foreign companies in foreign
IPOs were raised through the
private Rule 144A market.
Since the passage of the
JOBS Act, the U.S. IPO market
has made a strong rebound.
Bispham, Braukman, and Pierre
(2014) indicated that 2013 was
the best year since 2000 for companies going public. They report
128 companies going public in
2012 and 222 companies going
public in 2013. Demos (2014)
reports from Dealogic that the
DOI 10.1002/jcaf
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The Journal of Corporate Accounting & Finance / January/February 2015
United States had a good year
luring foreign companies to go
public in the United States in
2013, with 2014 shaping up to
be even better. Through March
2014, the United States has
accounted for 28% of IPOs
globally, with 60 out of 211
deals, which is the best since
2000. Hoffman and Demos
(2014) report that 2014 is on
track to be the busiest year since
1996 for foreign firm filings for
IPOs.
DATA
The data for this study are
taken from several sources. The
IPO data taken two years before
and after the JOBS Act are from
the Securities and Exchange
Commission’s (SEC’s) EDGAR
website and the Securities Data
Corporation database. The IPO
data excludes offers with share
prices below $1, financial firms
with a 6000 Standard Industrial
Classification code, offerings
less than $1 million, and if the
market exchange for the IPO is
unknown. Revenue, industry,
employees, and dual-classification information is taken from
Morningstar, Yahoo! Finance,
and FactSet Mergerstat.
FINDINGS
Exhibit 1 provides a distribution of the number of U.S.
IPOs from two years prior
through two years after the
JOBS Act, April 2010 through
April 2014. The number of
IPOs after the JOBS Act has
increased, as shown in Exhibit
1. As Exhibit 1 indicates, the
percentage of global IPOs to
the total U.S. IPOs remains
somewhat constant prior to
and following the JOBS Act.
At first glance, it would appear
that the United States is not losing any more of its competitive
edge attracting foreign IPOs.
Chinese-based IPOs were the
predominant foreign-based
offering prior to the JOBS Act
but declined rapidly because of
Chinese firm accounting issues
that flared up in 2011. If you
exclude the China-based firms,
the percentage of foreign-based
offerings to the total U.S. IPOs
actually increased from 14.4%
before the JOBS Act to 16.3%
after the JOBS Act. Jensen et
al. (2012) report foreign-based
offerings to total U.S. IPOs in
2011 to be only 5.5% for offerings less than $75 million.
Exhibit 2 separates IPOs
into whether they met the criteria to be an EGC before and
after the JOBS Act passage
to show whether EGCs have
increased or changed due to
Exhibit 1
IPOs Before and After the JOBS Act*
Before JOBS Act
Total IPOs
After JOBS Act
Year –2
Year –1
Year +1
Year +2
157
128
118
250
Foreign-based
59
27
21
50
China-based only
35
10
2
9
U.S.-based
98
101
97
200
34.2%
21.5%
17.8%
20.0%
Total dual offerings
5
0
7
22
Dual foreign-based
1
0
1
6
Dual U.S.-based
4
0
6
16
Size < $75 million
64
37
39
81
Size > $75 million
93
91
79
169
< $75 million/Total
40.8%
28.9%
33.1%
32.4%
Foreign/Total
*Represents the total number of U.S. IPOs each year prior to the JOBS Act passage and after the JOBS Act passage, separated by whether the IPO is from a
foreign-based firm or U.S.-based firm, whether they used a dual stock classification, and the size of the issuance.
DOI 10.1002/jcaf
© 2015 Wiley Periodicals, Inc.
The Journal of Corporate Accounting & Finance / January/February 2015
13
Exhibit 2
IPOs Before and After the JOBS Act Based on Emerging Growth Company*
Before JOBS Act
Total IPOs by EGCs
After JOBS Act
Year –2
Year –1
Year +1
Year +2
N = 133
N = 104
N = 88
N = 205
Total of other IPOs
N = 20
N = 20
N = 22
N = 38
Revenue by EGCs
N = 133
N = 104
N = 88
N = 205
Mean (millions)
$185
$178
$181
$134
Median (millions)
$111
$101
$89
$53
Revenue other IPOs
N = 20
N = 20
N = 22
N = 22
Mean (millions)
$12,513
$4,687
$5,076
$8,103
Median (millions)
$2,606
$2,097
$3,350
$2,750
Offer size EGCs
N = 133
N = 104
N = 88
N = 205
Mean (millions)
$112
$154
$129
$137
Median (millions)
$83
$110
$81
$87
Offer size other IPOs
N = 20
N = 20
N = 22
N = 38
Mean (millions)
$1,440
$399
$1,129
$584
Median (millions
$312
$318
$378
$409
Employees EGCs
N = 126
N = 94
N = 78
N = 192
1,250
574
638
745
373
313
204
143
Employees other IPOs
N = 20
N = 18
N = 20
N = 35
Mean
28,391
20,206
15,944
18,520
Median
5,175
3,150
3,345
4,500
N = 132
N = 104
N = 87
N = 205
Mean
30%
30%
39%
40%
Median
26%
23%
33%
30%
N = 20
N = 20
N = 22
N = 37
Mean
Median
EGCs% of total shares
offered
Other IPOs % of total
shares offered
Mean
34%
39%
38%
31%
Median
25%
31%
24%
21%
*Represents firm characteristics based on whether the firm doing an IPO would have fit into the emerging growth company (EGC) category as defined by
the JOBS Act.
the JOBS Act. Murphy (2014)
reports that approximately
80% of companies that have
filed for an IPO since the JOBS
Act meet the requirement for
© 2015 Wiley Periodicals, Inc.
EGC status. Kathleen Smith,
a principal at IPO research
firm Renaissance Capital,
says it is likely that all of them
have taken advantage of the
confidentiality provision in
the JOBS Act. Approximately
83% of the IPO offers after the
JOBS Act in Exhibit 2 fit the
EGC status. Exhibit 2 further
DOI 10.1002/jcaf
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The Journal of Corporate Accounting & Finance / January/February 2015
compares EGCs versus all
other IPOs based on revenue,
offer size, number of employees, and the percentage of
shares offered during the IPO
to the total number of firm
shares. As would be expected,
EGCs have less revenue, smaller
offer size, and fewer employees
than firms not meeting EGC
status. Examining the number
of EGC IPO offers before and
after the JOBS Act shows that
the number of offers increased
in the second year after the
JOBS Act. Exhibit 2 also
shows that EGCs are offering a
greater percentage of shares to
total shares outstanding after
the JOBS Act.
Another concern regarding the JOBS Act is whether
the relaxed rules will lure more
foreign firms to list in the United
States. Hoffman and Demos
(2014) contend that overseas
companies will want to list in
the United States because they
can maintain control of their
companies by not issuing enough
shares for control or by using
a dual share classification. In
addition, they argue that many
foreign firms are exempted from
some disclosure requirements,
and they are not required to
be profitable at listing, as is the
case with most other foreign
markets. Exhibit 3 compares the
characteristics of foreign IPOs
to U.S. IPOs. One can see the
decline in foreign IPOs two years
prior to the JOBS Act but with
a recovery in foreign IPOs two
years after the JOBS Act. The
offer size of the foreign IPOs
appears to be smaller than the
offer size of the U.S. IPOs after
the JOBS Act. Interestingly, the
foreign IPOs after the JOBS Act
are selling a larger percentage of
total shares outstanding, which
is opposite of what Hoffman and
Demos state.
DOI 10.1002/jcaf
Exhibit 4 compares characteristics of firms using a dualclass share offering to those
using single share offerings. In
general, the major advantage of
dual offerings is the ability for
one group of shareholders to
maintain a strong control position. There have been more dual
offerings since the passage of the
JOBS Act. However, of the 29
dual IPO offers since the JOBS
Act, only seven are by foreign
firms. Although they are not
using the dual structure, Hoffman and Demos (2014) report
that the giant Chinese e-commerce company Alibaba Group
Holding Ltd. was interested in
going public in the United States
because the United States will
allow a small group of company
insiders to retain the right to
nominate a majority of board
members after the firm does
goes public. (In fact, Ali Baba
did go public on September
18, 2014, and founder Jack
Ma and veteran managers did
maintain control afterward; see
http://abcnews.go.com/Technology/wireStory/alibabapost-ipo-structure-insiderscontrol-25557717). As one
would expect, a distinct difference between dual- and singleclass shares is that the majority
of noncontrolling shares are
sold by dual-class IPOs. The
companies doing dual-class
IPOs also appear to larger companies (not EGCs) as shown by
the larger revenue, offer size, and
number of employees.
CONCLUSION
Part of the mystery behind
whether the JOBS Act is working the way it was intended is
that due to the confidential filing for an EGC, the number of
firms thinking of going public
is not known. Borchardt (2013)
reports that the SEC stated that
more than 100 companies filed
under the confidentially process
in 2012. The confidentiality provision has caused the IPO pipeline to be understated. According to the JOBS Act, companies
do not have to disclose anything
about their financials until 21
days before the start of the
road show. This provision helps
companies feel more confident
that even if they don’t go public
after they filed, their financials
will not be publicized for competitors to view. Now a firm files
confidentially, and if a crisis
occurs or the firm can’t get ready
in time, the market doesn’t know
about it. Before the JOBS Act,
the firm would face the scrutiny
of the market and possibly take
a hit to its reputation. Chasan
(2013) reports that some CFOs’
have embraced the confidentiality feature of the JOBS Act to
avoid letting competitors access
their financials for months or
until there is a decision to issue.
Some argue that the confidentiality feature allows CFOs
taking their firm public time
to straighten out issues such
as what happened to Groupon
after stating their intention to go
public. Chasan (2012) reports
Audit Analytics data indicating
that from 2004 to 2011, 1,827
firm went public in the United
States, and 563 of those firms
have had a financial restatement.
The question is whether these
firms with financial restatements could have avoided the
issue by filing confidentially
under the JOBS Act. Rapoport
(2012a) reports that Groupon
went public in 2011 but had
well-publicized disagreements
with the SEC over its accounting. If Groupon could have filed
under the JOBS Act, it could
have possibly fixed the disagreements with the SEC behind
© 2015 Wiley Periodicals, Inc.
The Journal of Corporate Accounting & Finance / January/February 2015
15
Exhibit 3
IPOs Before and After the JOBS Act Comparing Foreign and U.S. Offerings*
Before JOBS Act
After JOBS Act
Year –2
Year –1
Year +1
Year +2
Total IPOs foreign
N = 59
N = 27
N = 21
N = 50
Total IPOs U.S.
N = 98
N = 101
N = 97
N = 200
Revenue foreign
N = 55
N = 23
N = 13
N = 44
Mean (millions)
$582
$879
$2,314
$1,231
Median (millions)
$168
$227
$386
$209
Revenue U.S.
N = 98
N = 101
N = 97
N = 200
Mean (millions)
$2,479
$733
$1029
$1,446
Median (millions)
$151
$118
$164
$75
Offer size foreign
N = 59
N = 27
N = 21
N = 50
Mean (millions)
$136
$287
$105
$180
Median (millions)
$85
$92
$50
$126
Offer size U.S.
N = 98
N = 101
N = 97
N = 200
Mean (millions)
$367
$162
$357
$212
Median (millions)
$90
$120
$100
$100
Employees foreign
N = 56
N = 25
N = 18
N = 47
Mean (millions)
2,881
5,112
8,970
2,813
Median (millions)
806
582
339
746
Employees U.S.
N = 94
N = 90
N = 83
N = 186
Mean
6,076
3,225
2,926
3,943
375
356
368
187
N = 59
N = 27
N = 21
N = 48
Median
Foreign% of total shares
offered
Mean
25%
23%
52%
50%
Median
20%
18%
42%
30%
N = 98
N = 101
N = 96
N = 200
Mean
36%
33%
39%
36%
Median
30%
25%
29%
28%
U.S.% of total shares
offered
*Represents firm characteristics based on whether the firm doing an IPO is a foreign company or a U.S.-based company before and after the JOBS Act.
closed doors before going public. Clearly, the confidentiality
that the JOBS Act brings could
have possibly avoided the very
public situation. However, the
© 2015 Wiley Periodicals, Inc.
JOBS Act’s confidentiality may
have simply masked problems
until after the company went
public. Maybe EGCs should
not be exempt from the array of
accounting and corporate governance requirements contained in
the JOBS Act.
In summary, the more
recent IPO resurgence can
DOI 10.1002/jcaf
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The Journal of Corporate Accounting & Finance / January/February 2015
Exhibit 4
IPOs Before and After the JOBS Act Comparing Dual and Nondual Offerings*
Before JOBS Act
After JOBS Act
Year –2
Year –1
Year +1
Year +2
N=6
N=0
N=7
N = 22
N = 150
N = 128
N = 110
N = 226
Revenue dual
N=5
N=0
N=7
N = 22
Mean (millions)
$700
n/a
$4,904
$3,327
Median (millions)
$574
n/a
$640
$378
Revenue nondual
N = 147
N = 124
N = 101
N = 221
Mean (millions)
$1,834
$949
$914
$1,208
Total IPOs dual
Total IPOs nondual
Median (millions)
$150
$227
$162
$75
Offer size dual
N=6
N=0
N=7
N = 22
Mean (millions)
$350
n/a
$2,536
$402
Median (millions)
$203
n/a
$233
$253
Offer size nondual
N = 150
N = 128
N = 110
N = 227
Mean (millions)
$279
$214
$172
$186
Median (millions)
$85
$140
$90
$96
Employees dual
N=6
N=0
N=7
N = 22
Mean (millions)
1,230
n/a
1,546
4,475
Median (millions)
Employees nondual
Mean
Median
Dual% of total shares
offered
918
n/a
1,550
1,061
N = 143
N = 115
N = 96
N = 213
5,044
4,554
4,186
3,640
447
479
337
188
N=6
N=0
N=7
N = 22
Mean
60%
n/a
57%
77%
Median
100%
n/a
53%
99%
N = 149
N = 128
N = 109
N = 226
Mean
30%
33%
40%
35%
Median
25%
24%
32%
27%
Nondual % of total
shares offered
*Represents firm characteristics based on whether the firm doing an IPO does a dual offering.
indeed be attributed in part to
the provisions of the JOBS Act
that provided for more relaxed
regulations and disclosure
requirements. Of course, from
the corporate point of view, the
DOI 10.1002/jcaf
increase in IPOs in 2013 and
2014 means greater competition
for investment dollars. That is,
a consideration for firms considering an IPO may include
that competitive environment
and how a specific firm is positioned to undertake an IPO.
Nonetheless, the IPO process
has been made less burdensome
under the JOBS Act. That,
combined with somewhat of a
© 2015 Wiley Periodicals, Inc.
The Journal of Corporate Accounting & Finance / January/February 2015
recovery in the economy, is
leading a larger number of firms
to raise capital via the IPO process.
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Marlin R. H. Jensen holds a PhD from Texas A&M University. He has been an associate professor at Auburn
University since 1988. His research interests include corporate finance issues such as cost of capital and
security issuances, corporate governance, and electric utility restructuring. He has published in a number
of academic journals. Beverly B. Marshall is professor of finance at Auburn University. She earned her
PhD from Georgia State University. She has published articles in leading journals, including the Journal of
Business, Financial Management, and the Journal of Financial Research. John S. Jahera Jr. is the Lowder
Professor of Finance at Auburn University where he has served since 1980. He is widely published in the
area of corporate finance and also in the area of banking. He has published articles in the Journal of Banking & Finance and the Journal of Financial Research, among others. He serves as coeditor of the Journal
of Financial Economic Policy and serves on the editorial boards of several other journals.
© 2015 Wiley Periodicals, Inc.
DOI 10.1002/jcaf