Date of Award
Doctor of Philosophy
This dissertation presents three papers that examine the impact of a new regulation,Jumpstart Our Business Startups Act (JOBS Act) 2012, and initial public offering underpricing phenomenon. I study cost and benefit of the JOBS Act and human capital's impact on IPO underpricing in this dissertation. Specifically, paper 1 and paper 2 examine consequences of the JOBS Act. And paper 3 examines human capital's impact on IPO underpricing. Paper 1 studies impact of the JOBS Act on IPO's direct cost and indirect cost (underpricing). By collecting related information from three years pre-Act and three years post-Act, I find that the passage of the JOBS Act significantly increases the IPO indirect cost and decreases IPO direct cost. Voluntary disclosure of use-of-proceeds is an important strategy that JOBS Act affected firms use to decrease the information asymmetry. Both ordinary least square method and difference-in-difference method are used to support my results. Paper 2 studies the consequences of the JOBS Act. The JOBS Act creates a new category of new listed firms, Emerging Growth Companies (EGCs), with a key requirement of annual revenue less than $1 billion. EGCs can take advantage of less vigorous regulation and less disclosure requirement. Paper 2 examines the financial performance and value relevance of EGCs. I find that EGCs' financial performance is weaker than that of non-EGCs and the value relevance of accounting information is lower for EGCs. This study contributes to the literature by documenting unintended consequences of the JOBS Act. Lastly, paper 3 studies impact of manager ability on IPO underpricing. My key proxy of manager ability follows Demerjian et al. (2012) MA-Score. My results show that IPOs with higher manger ability tend to have lower IPO underpricing. This association becomes more pronounced if the CEO has higher motivation to monitor the IPO process. The findings of this study are valuable to issuing firms considering hiring higher caliber managers and investors in evaluating IPO firms.
Dissertation or thesis originally submitted to the local University of Memphis Electronic Theses & dissertation (ETD) Repository.
Yu, Ji, "Three Essays on IPO: The New Regulation and Initial Public Offering underpricing Phenomenon" (2015). Electronic Theses and Dissertations. 1223.