Abstract
I address why IPO volume, and especially small company IPO volume, has been so depressed for more than a decade. The conventional wisdom is that the main culprits are a combination of heavy-handed regulation, especially the Sarbanes-Oxley Act of 2002, a decline in analyst coverage of small firms, and lower stock prices since the 2000 technology bubble burst. I present an alternative explanation, the economies of scope hypothesis, that has very different policy implications. I also discuss the effect of tick sizes on the IPO market, as this is the current focus of policy recommendations from the S.E.C.’s Advisory Committee on Small and Emerging Companies. I then discuss the number of jobs created by companies going public, and the effect of alternative venues for cashing out and raising capital, SecondMarket and SharesPost. Lastly, I offer some thoughts on what can and should be done to reenergize the market.
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