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JOBS Act: So Far, Not Doing Its Job

The grand experiment's short-term results aren't reassuring


Last April, Congress passed the Jumpstart Our Business Startups (JOBS) Act. The goal was to improve job creation by making it easier for smaller companies to raise capital, such as through IPOs.

But according to a recent survey from BDO USA, which interviewed 100 financial executives, it looks like the legislation has been a dud. Less than a third of the respondents think the JOBS Act has led to more public offerings of small companies.

This shouldn’t be too surprising. Being a public company — JOBS Act or not — ain’t easy. Companies have to produce and sustain good results quarter after quarter, and Wall Street holds you to it — just ask Zynga (NASDAQ:ZNGA) and Groupon (NASDAQ:GRPN).

Besides, companies that have gone public generally prefer to stick to the more stringent rules, as it helps keep investor questions to a minimum.

True, the JOBS Act still is fairly new, and over time, it might ultimately have a positive impact. But for now, the results are underwhelming.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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