Drs. Zabihollah Rezaee and Joseph Zhang accepted for publication in the Asian Review of Accounting
For release: December 14, 2017
Dr. Zabihollah Rezaee, Thompson-Hill Chair of Excellence and professor of Accountancy, and Dr. Joseph Zhang, assistant professor of Accountancy recently had a paper accepted for publication in the Asian Review of Accounting. The paper is entitled "The Accounting and Market Consequences of the JOBS Act of 2012: An Early Study." The paper was co-authored with former FCBE Ph.D. student Dr. Ji Yu, State University of New York at New Paltz.
The paper investigates the market and financial performance of the Jumpstart Our Business Startups Act (the JOBS Act) of 2012. The JOBS Act was enacted on April 5, 2012, to enable Emerging Growth Companies (EGCs) to go public without being subject to the full vigorous range of regulations applicable to publicly traded companies. Regulators aim to create more jobs in the aftermath of the 2007 financial crisis by reducing the regulation and disclosure requirement for EGCs. However, concerns from opponents indicate that less vigorous regulation of EGCs may be detrimental to investors. To shed light on EGCs' performance in the capital market, this paper examines financial performance, market performance (Tobin's Q ratio), and value relevance of EGCs listed in U.S stock exchange between April 5, 2012 and April 5, 2015. The authors find that EGCs tend to exhibit lower financial and market performance. The authors also find that the value relevance of accounting information tends to be lower for EGCs. This study contributes to the literature by documenting the unintended consequences of the JOBS Act of 2012.