IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/pdv8n_v1.html
   My bibliography  Save this paper

Regulatory Costs of Being Public: Evidence from Bunching Estimation

Author

Listed:
  • Ewens, Michael

    (California Institute of Technology)

  • Xiao, Kairong
  • Xu, Ting

Abstract

We quantify the costs of major disclosure and governance regulations by exploiting a regulatory quirk: many rules trigger when a firm's public float exceeds a threshold. Consistent with firms avoiding costly regulation, we document significant bunching around three major regulatory thresholds. Estimations reveal that three examined rules' compliance costs range from 1.2% to 1.8% of market capitalization for firms near thresholds. Depending on the extrapolation assumptions, total costs for a median US public firm vary from 2.1% to 6.3% of market capitalization (with 4.3% being our preferred estimate). Regulatory costs have a greater impact on private firms' IPO decisions than on public firms' going private decisions, but such costs only explain a small part of the decline in the number of public firms.

Suggested Citation

  • Ewens, Michael & Xiao, Kairong & Xu, Ting, 2020. "Regulatory Costs of Being Public: Evidence from Bunching Estimation," SocArXiv pdv8n_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:pdv8n_v1
    DOI: 10.31219/osf.io/pdv8n_v1
    as

    Download full text from publisher

    File URL: https://osf.io/download/5fc68ca86ebcc6009c46aa0c/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/pdv8n_v1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:socarx:pdv8n_v1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://arabixiv.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.