The SEC’s IPO Fixation Could Cost Investors Trillions

The SEC is dismantling mandatory disclosure to generate a few more IPOs. Three live experiments — the UK, Australia, and the US SPAC boom — and basic arithmetic suggest the trade destroys far more value than it creates.

“Make IPOs Great Again.” That has become the organizing slogan of the SEC’s current deregulatory agenda. Chair Paul Atkins has invoked it to justify a May 2026 proposal to make quarterly reporting optional for all public companies, weakening the Compensation Discussion and Analysis (CD&A) section of proxy statements, rolling back Pay Versus Performance disclosures, and collapsing the filing categories that separate large companies from small ones. Under the proposal, companies would opt in to semi-annual reporting by checking a box on their annual 10-K cover page; those that do not check the box would default to quarterly. The logic runs in a straight line: disclosure is a burden, that burden repels firms from going public, fewer IPOs are bad for America, therefore make disclosure optional.

Each link in that chain is either factually contested, causally misdirected, or unsupported by evidence. Three distinct questions deserve clear answers before any of this proceeds: Are fewer IPOs actually a policy problem? Are disclosure burdens a material cause of fewer IPOs? And would broad disclosure rollbacks increase IPO volume enough to offset the investor-protection costs?

I have previously examined the second question, finding the evidence thin and dominated by micro-cap edge cases. This piece tackles all three. We now have live experiments—the UK, Australia, and the 2020–2021 US SPAC frenzy—where deregulation to spur IPO volume was tried. Their results are not what Chair Atkins’ agenda would predict. And I attempt, for the first time, a back-of-the-envelope estimate of what reducing mandatory disclosure could do to the US cost of capital—a figure that dwarfs any conceivable benefit from a few extra IPOs.

1. The UK Already Tried This

In July 2024, the UK Financial Conduct Authority (FCA) completed what it called the most significant overhaul of UK listing rules in more than three decades. The reform was explicitly motivated by the same diagnosis animating the SEC today: the number of companies listed on UK exchanges had fallen by roughly 40% from a recent peak, and regulators blamed the listing regime. The FCA scrapped the distinction between premium and standard listing categories, relaxed shareholder approval requirements for significant transactions, eliminated the mandatory requirement for a clean working capital statement, and reduced sponsor oversight in the post-IPO period. Lord Hill’s UK Listings Review, which launched the reform process, made reducing regulatory friction the centerpiece of its prescription.

The results, one year on, are sobering. According to the FCA’s own quarterly listings data, the UK Main Market saw 26 IPOs in 2025, raising total proceeds of approximately £4.1 billion. Activity was, in the FCA’s own measured phrasing, “broadly flat” from 2023 to 2025 before picking up modestly in Q4. EY’s IPO Watch described 2025 as the highest IPO level since 2021—but 2021 was the year of the global SPAC and pandemic boom, not a demanding benchmark. More to the point, London IPO activity “remains low when compared to historical levels,” EY acknowledged in the same sentence.

Academic scrutiny of the UK reforms has reached an even more uncomfortable conclusion. A 2025 paper in the Journal of Corporate Law Studies examining the drivers of the UK listing decline found “little evidence of a funding gap for firms” and concluded that the regulatory overhaul appeared aimed primarily at “preserving London’s global financial stature” rather than solving an empirically demonstrated problem. In other words, regulators reached for a regulatory explanation—burdensome listing rules—for a phenomenon with structural economic roots. The SEC is on the verge of making the same error.

The UK episode is not a clean natural experiment; IPO markets are cyclical and globally correlated, and one year is a short window. But that is precisely the point: if macro conditions and private capital availability dominate listing decisions—as they appear to—then weakening disclosure rules is unlikely to be the decisive lever. The UK’s own data, after its most ambitious listing reform in four decades, offers no evidence to the contrary.

2. Australia Reinforces the Lesson

Australia’s experience provides a second data point. The Australian Securities Exchange saw IPO fundraising fall to a twenty-year low in 2024, with just A$2 billion raised, A$1.3 billion of which came from a single listing. In June 2025, the Australian Securities and Investments Commission launched reforms to streamline the IPO timetable—mirroring, almost exactly, the reform template the FCA adopted in the UK and the SEC is now pursuing in the US.

The ASX itself was candid in its submission to ASIC’s consultation: the decline in listing activity is “largely cyclical rather than structural.” That is a remarkable admission from a market operator with a direct financial interest in more listings. ASIC’s own independent research report from February 2025 reached the same conclusion: the IPO slowdown does not represent a structural funding gap. It is a cyclical phenomenon being used to justify structural deregulation.

The UK and Australia cases are not perfect natural experiments—IPO cycles are short, globally correlated, and driven by interest rates, valuation sentiment, and private capital availability as much as by listing rules. The suggestive weight of both episodes, however, points in the same direction: reducing disclosure friction has not been the decisive variable. The common thread across the US, UK, Australia, Hong Kong, and Singapore is the dramatic expansion of private capital markets, industry concentration, and the changing economics of going public. Every jurisdiction has reached a different conclusion about its own listing rules. The data implicate private capital—not the quarterly 10-Q.

3. The SPAC Boom: A Domestic Experiment in “More IPOs, Less Disclosure”

We do not need to rely only on international comparisons. The United States has already seen a real-world version of “more IPOs with lighter disclosure requirements”—between 2020 and 2021. It is called the SPAC boom, and its results are instructive.

Special Purpose Acquisition Companies (SPACs) offered a route to public markets with materially different disclosure timing, liability exposure, projection practices, and sponsor incentives than traditional IPOs. Among other distinctions, de-SPAC transactions were permitted to use forward-looking financial projections protected by safe harbor—a right denied to traditional IPO filers. According to the CPA Journal, in 2020 and 2021 SPACs accounted for 59% of total US IPO proceeds combined, raising $245.9 billion across 861 vehicles. IPO count skyrocketed, exactly as deregulatory advocates would have predicted.

The consequences for retail investors were catastrophic. According to Fortune’s analysis of Renaissance Capital data, of the 199 companies that went public through SPACs in 2021, only 11% traded above their offering price within a year. The average SPAC share lost 43%. The De-SPAC index fell 75% in 2022. Per Wake Forest Law Review, the more than 300 companies going public through de-SPAC transactions from January 2018 to April 2022 had averaged a loss of 33% from IPO price; only 15% of 2021 SPAC targets were profitable at listing; at least 12 had filed for bankruptcy by April 2023.

Meanwhile, SPAC sponsors earned a mean return of 393% (Klausner et al.), even in cases where the post-merger company performed disastrously. The mechanism is textbook: the information asymmetry between sponsors (who knew the target) and retail investors (who were buying a blank check) was substantial, and the different disclosure regime meant retail investors had fewer tools to close that gap. Institutional sponsors captured the gains; ordinary shareholders bore the losses.

The SEC under Chair Atkins has positioned itself as the champion of retail investor access to public markets. The SPAC episode is a cautionary tale about what that access looks like when disclosure requirements are relaxed to maximize IPO volume. It does not look like democratized wealth creation. It looks like a wealth transfer from uninformed retail investors to informed institutional insiders.

4. The Misattributed Cause

Even setting aside the international and SPAC evidence, the basic causal attribution is contested by the academic literature the SEC’s own staff cites. Ewens, Xiao, and Xu (2024), published in the Journal of Financial Economics, estimate that the median firm bears compliance costs of approximately 4.3% of market capitalization annually. That number, however, deserves more scrutiny than it typically receives in deregulatory briefing documents. The 4.3% is not a direct measure: it is a model-dependent extrapolation from the behavior of micro-cap firms bunching just below three regulatory float thresholds—of $25 million, $75 million, and $700 million—to the full universe of public companies. The direct compliance cost estimates for firms near those thresholds run at 1.2% to 1.8% of market cap.

The extrapolation to 4.3% carries a confidence interval the authors themselves put at 2.1% to 7.8%, a nearly fourfold spread. Roughly half of the 4.3% headline reflects not the cost of following the rules but the cost of firms actively manipulating their public float to stay below regulatory thresholds—substituting debt for equity to shrink their float. Strip out those avoidance frictions and the paper’s own estimate falls to “at least 2.3%.” The methodology also explicitly excludes uniformly-applied regulations like Reg FD that do not use float thresholds—regulations more relevant to large-cap companies than small ones.

Citing 4.3% as the compliance cost of being public, without those caveats, overstates what the paper actually shows. More to the point, the authors themselves conclude that even accepting their estimate, “heightened regulatory costs only explain a small fraction of the decline in the number of public firms over the last two decades,” and that “non-regulatory factors likely played a more important role.”

The best available counterfactual for what targeted deregulation produces is the 2012 JOBS Act, which created reduced disclosure pathways for emerging growth companies. Dambra, Field, and Gustafson (2015) estimate this produced roughly 21 additional IPOs per year; Ewens et al. estimate approximately 28. Is 28 additional IPOs per year—many of them small, many of them in the micro-cap range most likely to fail—a benefit large enough to justify eliminating quarterly reporting for every public company in America? The SEC has not answered this question with numbers attached. It has not even posed it.

There is also a timing problem. Mauboussin, Callahan, and Majd (2017) and Doidge, Karolyi, and Stulz (2017) each document that roughly half the “listing gap”—the excess of exits over new IPOs—occurred before Sarbanes-Oxley became law in 2002. If the regulation is the cause, it cannot explain the trend that preceded it by nearly a decade.

The supply pipeline for future IPO candidates also merits scrutiny. The Kauffman Foundation’s 2025 National Report on Early-Stage Entrepreneurship, a 30-year longitudinal study published this month, finds that business formation has recovered to broadly pre-pandemic levels. But startup job creation still lags late-1990s peaks, first-year survival rates are declining, and the share of opportunity-driven versus necessity-driven entrepreneurship remains below pre-pandemic levels. More importantly, aggregate business formation includes everything from solo freelancers to incorporated ventures. The realistic pipeline of high-growth, employer-building firms that could plausibly become public companies is only a small fraction of that total. Weakening disclosure rules does not solve a supply problem rooted in the quality, not merely the quantity, of new firm formation.

5. Back of the Envelope: What Does This Cost?

The debate over disclosure reform almost always focuses on costs to preparers: audit fees, legal costs, management time. What it almost never addresses is the cost borne by investors when mandatory disclosure is reduced. Let me attempt a rough estimate, and then confront a skeptic’s challenge to it head-on.

Start with two numbers. The US stock market was worth approximately $69 trillion at the start of 2026. Professor Aswath Damodaran’s implied equity risk premium for the S&P 500 at that date was 4.23%, with an expected equity return of 8.41% against a risk-free rate of 4.18%.

The mechanism by which reduced disclosure raises cost of capital is well-established theory. Glosten and Milgrom (1985), the foundational market microstructure paper published in the Journal of Financial Economics, showed that the presence of traders with superior private information forces market makers to widen bid-ask spreads to protect themselves against adverse selection—effectively imposing an information tax on every uninformed investor in the market. Diamond and Verrecchia (1991), in the Journal of Finance, formalized the corollary: public disclosure reduces adverse selection costs, improves market liquidity, and lowers the risk premium investors demand to hold equity. Neither result has been overturned; both are textbook market microstructure.

There is also a concrete market observable that shows exactly what reducing disclosure frequency does: the behavior of bid-ask spreads around earnings announcements. It is one of the most consistently documented findings in financial economics—spreads widen in the days before an earnings release (when information is private and asymmetrically held) and narrow sharply afterward (when the release enters the public domain). Move from quarterly to semi-annual reporting and you double the windows during which that asymmetry festers uncorrected. More informed traders can act on information that retail investors cannot see. Market makers charge a wider spread to compensate. The cost of transacting in public equities rises for everyone without a private information channel.

Quantifying the precise basis-point effect of the proposed reforms is difficult, and I will not pretend otherwise; the academic papers that have tried to do so have faced legitimate methodological challenges. But the direction is strongly supported by theory—it follows from the adverse-selection mechanism formalized by Glosten and Milgrom, and is reinforced by the well-documented behavior of bid-ask spreads around earnings announcements. The SPAC episode illustrates the direction and potential scale of investor harm when public-market access is expanded faster than disclosure quality. That 33% average loss for retail investors against 393% returns for sponsors is not a clean estimate of the market-wide information premium, but it is a vivid warning about what reduced mandatory disclosure can produce in practice.

What follows is not a valuation model of the US equity market; it is a sensitivity analysis showing how small changes in required return can overwhelm the benefits of marginal IPO formation. The 25–75 basis point range should be read as an illustrative stress test, not as a point estimate derived from a structural model. The arithmetic is straightforward. Under a Gordon Growth framework, the value of the market is proportional to 1/(r − g), where r is the required equity return and g is the long-run dividend growth rate. With Damodaran’s r = 8.41% and g = 3.5%, the current implied earnings yield is r − g = 4.91%. Any increase in r raises that denominator, compressing the market valuation multiple. Three scenarios:

• Conservative (+25 bps): New r = 8.66%; new (r − g) = 5.16%. The market multiple falls by the ratio 4.91/5.16 = 0.9515, a valuation decline of 4.8%, or roughly $3.3 trillion off a $69 trillion market. Annual additional cost of equity capital across the whole market: $69 trillion × 0.0025 = $173 billion per year.

• Base case (+50 bps): New r = 8.91%; new (r − g) = 5.41%. Multiple falls by 4.91/5.41 = 0.9075, a valuation decline of 9.3%, or $6.4 trillion. Annual additional cost: $345 billion per year.

• Bear case (+75 bps): New r = 9.16%; new (r − g) = 5.66%. Multiple falls by 4.91/5.66 = 0.8675, a valuation decline of 13.3%, or $9.2 trillion. Annual additional cost: $518 billion per year.

A predictable critic will say: if reducing mandatory quarterly reporting raises risk premiums, rational firms will simply choose to file quarterly voluntarily to signal quality and lower their cost of capital. The SEC proposal is, after all, opt-in: companies that do not check the semi-annual box default to quarterly. Voluntary quarterly earnings releases on Form 8-K remain permitted even for semi-annual filers. Why not trust the market to sort this out?

The United Kingdom provides the closest available answer. The FCA abolished mandatory quarterly reporting in November 2014—the same reform the SEC is now proposing to replicate. In the first year, fewer than 10% of UK firms stopped providing quarterly reports, exactly as the “market will self-correct” theory predicts. But the trajectory tells a different story. By 2017—just three years in—roughly 40% of FTSE 100 companies and nearly 60% of FTSE 250 companies had stopped quarterly reporting entirely. In a paper I co-authored with Suresh Nallareddy and Robert Pozen (Journal of Law, Finance and Accounting, 2021), we examined what happened to those firms. The firms that voluntarily stopped quarterly reporting experienced a measurable reduction in analyst coverage. Fewer analysts followed them; the ones who did made less accurate forecasts. The information environment deteriorated in precisely the way the adverse-selection mechanism predicts—and it deteriorated not because firms were forced to disclose less, but because they chose to, once the mandate was lifted. The voluntary signaling equilibrium did not hold. The UK experience’s lesson, documented in a separate Forbes piece, is that “voluntary quarterly” is not a stable equilibrium: it erodes steadily as social norms in corporate disclosure shift from quarterly being the default to quarterly being an opt-in.

A sharper version of the objection goes further: if most firms eventually stop quarterly reporting (as the UK suggests they will), won’t the resulting risk premium increase be large enough to incentivize voluntary resumption, preventing the aggregate harm? This sounds compelling but misunderstands who bears the cost and at what scale. The risk premium increase for any single firm that stops quarterly reporting is small—a fraction of a basis point on that firm’s shares, too modest to overcome the compliance cost savings, management’s preference for less scrutiny, and the social norm shift underway.

But the aggregate damage from many firms making this locally rational choice is large: that is precisely the market-wide 25–75 bps increase we are estimating. This is a textbook public goods problem. Each firm under-provides information relative to the social optimum because it captures only a fraction of the benefit of its own disclosure while the full social cost—borne by all investors across the whole market—is diffuse and invisible to any individual firm’s calculus. The UK confirms both halves: firms stopped at scale, and the information environment deteriorated. The market did not self-correct. It degraded, firm by firm, each making a locally rational choice, producing a collectively irrational outcome.

There is also a structural reason why voluntary quarterly earnings releases cannot substitute for mandatory Form 10-Q filings even if companies want to provide them. Mandatory 10-Qs require independent accountant review under PCAOB standards, follow a standardized format under Regulation S-X, carry strict Exchange Act Section 18 liability for material misstatements, and must be filed in machine-readable XBRL format. Voluntary earnings releases on Form 8-K have none of those properties. They are unaudited, selectively formatted, furnished rather than filed (lower liability), and not required to include XBRL data. The value of the mandatory 10-Q to investors is not just the information it contains—it is the standardization, comparability, third-party attestation, and legal accountability that surround it. Voluntary disclosure produces some of the signal but none of the verification infrastructure.

The 2.3% compliance cost is a cost borne by the issuing company, estimated from the behavior of micro-cap firms bunching near regulatory float thresholds. The 25–75 bps ERP increase is a cost imposed on all equity investors across the entire $69 trillion market. The denominators are not the same. Applying 2.3% to Apple’s $3 trillion market cap would imply $69 billion in annual compliance costs—a number that bears no relationship to reality. Apple’s actual SOX and disclosure-related costs are a fraction of 1% of its market cap. The Ewens figure is meaningful only for the micro-cap companies the methodology actually studies.

The correct aggregate comparison runs as follows. Applying the 2.3% figure generously to all approximately 3,800 US public companies at a median market cap of around $700 million gives roughly $61 billion in total annual compliance savings across the entire public company universe—and even that is a substantial overestimate for large-caps. Against that, the conservative 25 bps ERP increase imposes $173 billion in additional annual capital costs on all equity investors. The investor-side cost is nearly three times the company-side saving, in the most favorable possible comparison. At the base-case 50 bps, the ratio is closer to six to one.

Critically, the Ewens paper measures costs to issuers but says nothing about the information premium borne by investors on the other side of every trade. A regulation that costs a company 2.3% of its market cap in compliance expenditure may simultaneously reduce the information asymmetry that investors charge a premium to bear. Whether the compliance cost or the information premium is larger is exactly the empirical question the SEC’s deregulatory agenda has not attempted to answer. The Ewens paper’s own conclusion—that regulatory costs explain only a small fraction of the IPO decline—implies that the threshold-triggered rules it studies are not the binding constraint on IPO formation. Repealing them wholesale to generate 28 more IPOs per year, while potentially widening information asymmetry across the full $69 trillion market, inverts the cost-benefit ratio by an order of magnitude.

There is a third way to see how badly the deregulatory cost-benefit framing misfires—one that works from the bottom up rather than the top down. In a separate analysis, I examined what ExxonMobil’s 10-K actually costs relative to what it enables. The direct compliance cost—printing, legal review, XBRL tagging, and related work—runs to approximately $15 million annually, generously estimated. Being a disclosing public company unlocks two enormous sources of value in return.

First, research on private company valuation discounts implies that public listing creates somewhere between $130 and $162 billion in market value for ExxonMobil relative to a hypothetical private counterpart—by providing liquidity, price transparency, and access to institutional capital at a scale private markets cannot replicate. Second, S&P 500 membership creates a structural demand premium on top of that. Kashyap, Kovrijnykh, Li, and Pavlova (2021), in the Journal of Financial Economics, document what they call the “benchmark inclusion subsidy”: fund managers evaluated against the S&P 500 hold its constituent stocks inelastically, regardless of valuation, permanently inflating their prices. Jiang, Vayanos, and Zheng (2025), in the Review of Financial Studies, confirm that passive flows disproportionately raise the prices of the index’s largest members—a structural bias toward overvaluation for mega-cap index constituents. Calibrating this S&P 500 premium conservatively at 25–35% of ExxonMobil’s current market capitalization implies an additional $160 to $230 billion in value attributable to index membership alone—value that simply would not exist if ExxonMobil were not a listed, disclosing public company.

Combined, the public listing premium and the S&P 500 inclusion subsidy—both of which require being a disclosing public company to access—total $290 to $390 billion for ExxonMobil. Against a $15 million compliance cost, that is a return of 19,000 to 26,000 to one. The 10-K is not a burden to be optimized away. It is the entry ticket to trillions of dollars in capital-market value that private firms cannot reach. The deregulatory agenda implicitly proposes to cheapen that ticket. It does not mention what gets left at the door.

These estimates carry wide confidence intervals and should be treated accordingly. They are back-of-the-envelope, not policy analysis. But the order of magnitude matters. The SEC has not provided any quantified estimate of what the proposed reforms will do to the information environment in public markets or to investors’ cost of capital. It has simply asserted that more IPOs are good and that less disclosure will produce them. That is not a cost-benefit analysis. It is a slogan with a spreadsheet.

6. The Wrong Tax

There is a compliance cost that genuinely burdens IPO candidates and receives almost no attention in the current deregulatory debate. Former SEC Commissioner Robert Jackson has documented the roughly 7% fee charged by investment bankers, lawyers, and other advisors before a company can list. The two figures—a 7% front-loaded transaction cost and the 4.3% recurring compliance burden cited by Ewens et al.—are economically different and not directly comparable. But the contrast is doubly revealing: first, the policy debate focuses on recurring disclosure costs while ignoring large front-loaded intermediation costs; and second, as discussed above, the 4.3% figure is itself likely overstated for most public companies, since it is driven by micro-cap threshold behavior and carries a confidence interval extending down to 2.1%. If the goal is genuinely to reduce barriers to going public, the front-loaded advisory fee is both a larger and better-identified target for reform.

The omission is revealing. The 7% tax goes to investment banks and law firms, who are also among the most vocal advocates for deregulatory IPO reform. Reducing mandatory reporting obligations goes to management teams who would prefer less scrutiny. Neither group is the small entrepreneurial founder the “Make IPOs Great Again” rhetoric invokes. The political economy of disclosure reform runs in one direction: costs are concentrated on preparers who lobby vigorously, while benefits are diffuse and their beneficiaries—ordinary investors—are largely absent from the room.

7. Who Actually Wins?

Information is not equally distributed in financial markets. Sophisticated institutional investors, large banks, and well-resourced hedge funds have proprietary channels to corporate information—management access, industry contacts, alternative data vendors. Retail investors and the analysts who serve them depend heavily on mandatory public disclosure, precisely because they lack those private channels.

Strip away mandatory quarterly reporting and the information does not disappear—it goes private. Management teams, who see financial results in real time, retain full knowledge of the firm’s trajectory. Large investors renegotiate access. Informed traders benefit from wider windows of asymmetric information. The gap between what insiders know and what public investors can observe widens—which is precisely the gap that drives up the equity risk premium in the estimates above.

The firms most eager to be free of quarterly reporting and executive pay disclosure are not the small entrepreneurial companies the SEC wants to champion. They are the large incumbents already public—those whose management teams would prefer to operate with less scrutiny and whose compensation structures do not survive the comparison enabled by Pay Versus Performance tables. “Make IPOs Great Again” turns out, on inspection, to be a gift to incumbents dressed as a favor to entrepreneurs.

8. A Proportionate Alternative

None of this is an argument against all reform. The right starting point is scale. Under current rules, a $250 million company faces substantially the same quarterly reporting and internal controls requirements as one 100 times its size. Proportionality reforms targeted specifically at genuine small-cap new entrants have an empirical and economic logic. The JOBS Act’s tiered framework for emerging growth companies demonstrated that targeted relief produces measurable—if modest—results. Build from that framework rather than dismantling the entire disclosure regime for everyone.

If the genuine concern is that private company founders avoid public markets because of disclosure costs, the more effective intervention is to require greater transparency from large private companies. Research by Aghamolla and Thakor (2022, Journal of Accounting Research) found that mandating disclosure for private biopharmaceutical firms actually increased their propensity to go public: when private firms must disclose regardless, the confidentiality advantage of staying private shrinks.

The SEC could require large late-stage private companies—those with more than $1 billion in revenue or 2,000 employees, or another empirically justified threshold—to begin filing basic financial statements. This would reduce the informational advantage of staying private, protect workers and customers of those firms who currently have no window into their finances, and potentially encourage more IPOs through precisely the mechanism the evidence supports.

Finally, the SEC should commission and publish a rigorous, independent cost-benefit analysis—with auditable data and disclosed methodology—before proceeding with changes to quarterly reporting and executive compensation disclosure. The JOBS Act produced roughly 28 additional IPOs per year. That is the most relevant counterfactual available. Extrapolating from there to “eliminate quarterly reporting for Apple and JPMorgan” requires a quantity of evidence that does not currently exist.

The Bottom Line

“Make IPOs Great Again” is a policy built on a slogan, not a diagnosis. The UK tried the deregulatory playbook in 2024 and got broadly flat IPO activity. Australia acknowledges its own IPO decline is cyclical. And the United States has already seen a real-world version of “more IPOs with lighter disclosure”—it was called the SPAC boom, and it imposed severe losses on public-market investors while enriching institutional sponsors. The research most often cited to justify disclosure rollbacks concludes, in its own pages, that regulatory costs explain only a small fraction of the listing decline.

And the cost of getting this wrong is not small. A back-of-the-envelope sensitivity analysis grounded in foundational market microstructure theory suggests that a meaningful reduction in mandatory public disclosure could raise the US equity risk premium by 25–75 basis points—implying a permanent decline in equity market value running into trillions of dollars and additional annual capital costs to the US economy of hundreds of billions. These estimates carry wide confidence intervals. But set against a demonstrated benefit of roughly 28 additional IPOs per year from targeted disclosure relief, the orders of magnitude are not close.

Regulators should proceed with considerably more caution the next time someone advances the hypothesis that reporting burdens are a significant barrier to firms going public. The international evidence, the domestic evidence, the academic literature, and basic arithmetic do not support it.