A welcome attempt to restore the appeal of initial public offerings in America
Mar 31st 2012 | from the print edition
HAVING spent years heaping new rules onto its financial markets, America is about to take a modest step in the opposite direction. On March 27th Congress passed the JOBS or, rather ludicrously, “Jumpstart Our Business Start-ups” Act, which aims to revive growth by easing the regulatory burden on companies seeking to raise capital (see article).
The IPO drought does not mean firms cannot raise capital. There are plenty of other ways for them to do so, from private equity and private placements to bank loans. But the public markets serve a unique purpose: they provide capital directly to young, growing firms, give early investors a means to cash out and enable ordinary investors to stake a claim in the fortunes of those firms.