Date of Award

Summer 2007

Document Type


Degree Name

Doctor of Philosophy (PhD)


Business Administration-Finance

Committee Director

Kenneth Yung

Committee Member

Mohammad Najand

Committee Member

Licheng Sun

Committee Member

Larry Filer


This dissertation includes two essays that study initial public offerings (IPO) earnings management. The first essay examines the underwriter's certification and monitoring roles in IPO earnings management; the second essay explores the relation between IPO earnings management and post-IPO institutional ownership.

In the first essay, we investigate the certification role played by underwriters. We hypothesize that there is a negative relation between IPO earnings management and underwriter reputation and that there is a positive relation between underwriter reputation and firm operating performance. In addition, underwriters continue providing monitoring to the firms they take public. Using a sample of IPOs, we obtain results supporting our hypotheses. A weighted least squares regression confirms the robustness of our results.

In the second essay, we address two questions: (1) whether post-IPO institutional ownership is affected by pre-IPO earnings management; and (2) whether the presence of institutional ownership has an impact on stock return. We find that institutional investors are not likely to be deceived or misled by pre-IPO earnings management. Institutional investors seem to be able to identify IPO firms of higher quality and always seek IPO firms with lower discretionary accruals depending on post-IPO information, but the presence of institutional ownership itself has little impact on stock returns.