Effects Beyond Capital Markets: The Shift from “Prix Fixe” to “À La Carte” Securities Regulation

Compared with “prix fixe” mandates, “à la carte” securities regulations enable local optimization and allow firms to reallocate corporate resources from public reporting to company building. Utilizing a rare retroactive application in securities regulation, we examine the real effects of a shift from a prix fixe to an à la carte regime. Upon the enactment of the Jumpstart Our Business Startups Act, retroactivated emerging growth companies (EGCs) report higher short-window returns than control firms. During the period when the à la carte regulation applies, retroactivated EGCs spend more on research and development (R&D) and create more jobs than control firms. Once the à la carte regime expires, EGCs reduce R&D spending and hiring. In the cross-section, retroactivated EGCs that more frequently elect to delay adopting new accounting standards exhibit greater positive real effects and higher enactment-window returns. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M48; O32; J2.