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Ting Xu – Darden – Brown Bag Series

24 February @ 1:45 pm - 2:45 pm

Regulatory Costs of Being Public: Evidence from Bunching Estimation (joint with Michael Ewens and Kairong Xiao)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3740722

Many disclosure and internal governance regulations for U.S. public firms trigger when a firm’s public float exceeds a threshold. Consistent with firms seeking to avoid costly regulation, we document significant bunching around multiple regulatory thresholds introduced from 1992 to 2012. We present a revealed preference estimation strategy that uses this behavior to quantify regulatory costs. Our estimates show that various disclosure and internal governance rules leads to a total compliance cost of 4.3% of the market capitalization for a median U.S. public firm. We apply the estimated costs to firms’ public-private choice and show that regulatory costs significantly impact private firms’ decisions to go public, while have limited effects on public firms’ decisions to go private.

 

Details

Date:
24 February
Time:
1:45 pm - 2:45 pm
Event Categories:
,
Website:
https://www.darden.virginia.edu/faculty-research/directory/ting-xu

Venue

Zoom