De-burdening the IPO approval process: SEC reviews under the JOBS Act

This paper examines the extent to which the 2012 JOBS Act relaxed the SEC review and approval process for U.S. Emerging Growth Company (EGC) IPOs. Although the intent of the JOBS Act was to make it easier for companies to go public, whether and to what extent SEC scrutiny waned as a result is unclear. The findings show that the JOBS Act in fact led to a pronounced reduction in IPO durations, the volume of SEC comment letters on S-1 filings, and the number and breadth of comments in initial comment letters. No mechanical link between reduced SEC scrutiny and additional disclosure exemptions for EGC issuers under the Act is identified. Reduction in SEC scrutiny is less pronounced in highly concentrated industries, where the proprietary costs of the disclosure are high. Following the JOBS Act, the SEC comment proportionally more on issues directly related to the offering, but less on core accounting issues, general business matters, and potential disclosure deficiencies. Overall, the findings are consistent with the JOBS Act easing the IPO approval process via a substantial reduction in the volume and scope of SEC critiques, particularly in industries where competition, and thus information uncertainty, is lower.