Underwriter networks and the 2012 JOBS Act

Abstract

Copyright © 2022 The Author. Using a difference-in-differences framework, I examine the impact of the 2012 Jumpstart Our Business Startups (JOBS) Act on underwriter network centrality as measured by Degree, Betweenness, Closeness, and Eigenvector. The Act has resulted in greater information asymmetry which suggests a greater role for underwriter centrality. However, the desire to avoid collaboration coupled with greater efficiency in underwriter hiring after the Act point to a reduced role for underwriter centrality. Which effect dominates? Using a sample of US IPOs from 2001 to 2019 I find that Degree, Closeness, and Eigenvector have reduced for emerging growth companies (EGCs) following the Act. However, there is no impact on Betweenness. My results are robust to measuring centrality over different periods and various specifications including propensity score matching. I also find that the proportion of IPO co-managers and co-manager shares relative to the entire underwriting syn dicate has reduced following the Act. Finally, my results show that, after the Act, a co-manager on the IPO is not likely to become a book manager in the first SEO.