Foreign issuers in emerging growth company IPOs

摘要

We examine how the JOBS Act, a regulatory reform that streamlined the process of going public in the US, affected foreign issuers. The reform extended disclosure and offering process accommodations to issuers, including foreign issuers, qualifying as emerging growth companies (EGCs). We find systematic differences in the effects of the shock on foreign issuers, complementing existing evidence on the impact of the JOBS Act. In particular, underpricing of foreign issuer IPOs decreases rather than increases after the shock. Further, greater flexibility in pre-IPO access to potential investors, which is consistent with reduced valuation uncertainty, helps explain the lower underpricing of foreign issuers after the shock. The results are not driven by differences in issuer characteristics, changes in other costs of going public, or other likely sources of confounding. Our findings highlight the differential effects of regulatory shocks on foreign issuers accessing the US market. Published by Elsevier B.V.