Authors Michael Dambra, Laura Casares Field, Matthew T. Gustafson and Kevin Pisciotta recently published a paper, “The Consequences to Analyst Involvement in the IPO Process: Evidence Surrounding the JOBS Act,” which reviews research analyst involvement post-JOBS Act in offerings. The authors consider whether participation by affiliated analysts in securities offerings affects their research by evaluating analyst activity relating to EGCs. The control group used are non-EGC issuers. The authors conclude that pre-IPO participation increases analyst optimism resulting in less accurate reports. While the paper presents interesting data regarding the value of research, it is difficult to gauge the differences that were observed pre- and post-JOBS Act in research involvement. Compliance policies for firms, including many not subject to the analyst settlement, prevent analyst participation in the offering process. There has been little to no practical effect from the JOBS Act relaxation of certain research activities in relation to EGCs. To the extent that there is greater “optimism” with respect to EGCs, it is difficult to isolate and attribute such sentiment to analyst involvement.
