The declining number of U.S. public companies has attracted concern from regulators, prompting changes to make the IPO process more attractive. One set of changes (the JOBS Act) was designed to reduce IPO costs by allowing eligible firms to test the waters with investors and reduce disclosure, both of which increase firms' information advantage over investors. We model firm behavior in response to these increased information advantages and using a difference-in-difference setting, we show that while these changes have benefited some firms, they have led to a decrease rather than an increase in the number of firms going public. Furthermore, we show that testing the waters, rather than reduced disclosure, is driving this result. 

Passive funds deviate from their benchmarks by buying new issue bonds before they are index eligible. Bonds with higher allocations to passive funds have lower underpricing and short‑term returns. Proxies for order book size and post-issuance performance indicate these deals have lower demand from other investors, consistent with passive investors serving as a backstop for deals that would otherwise not be completed at the stated terms. The price inelastic capital supply of passive funds benefits underwriters, issuers and active funds. Despite receiving underperforming new issue bonds, primary market participation is optimal for passive funds given limited secondary market liquidity.

We use a comprehensive global dataset of firm-level corporate bond issuance and financial statement data to show that, unlike other periods of financial stress, the COVID-19 pandemic saw a worldwide boom in corporate bond issuance. Firms in some emerging economies took advantage of favorable liquidity conditions and, for the first time, exhibited behavior akin to that of firms in advanced economies. Notably, firms in East Asia experienced a surge in local currency-denominated bonds, reflecting the depth of their financial markets and the size of their domestic investor base. However, for some of these firms, the wave of bond issuance was accompanied by a deterioration in certain financial vulnerability indicators.