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Access Type
WSU Access
Date of Award
January 2023
Degree Type
Dissertation
Degree Name
Ph.D.
Department
Management and Information Systems
First Advisor
Sudip Datta
Abstract
This study investigates if bank debt intensity alleviates the information asymmetry for IPO firms and the impact of bank certification on direct (gross spread) and indirect compensation (IPO underpricing) for IPO underwriting. I document that higher bank debt proportion and shorter bank debt maturity structure reduce IPO underpricing, spread, offer price revision, and total issuance costs. Attributing this relationship to information asymmetry, evidence shows that the IPO firms with greater bank debt intensity are not inherently different in firm quality as reflected by their long-term stock and operating performances. Bank certification is more pronounced for younger and high growth IPO firms enduring more severe informational opacity and dampened after information enhancing regulations (SOX and Dodd-Frank Acts). IPO underpricing is lower for secured loans, sole lenders, and for IPOs operating in more stable and differentiated product markets. My analysis also reveals some complementarity and substitution effects in the certification provided by underwriters, VCs, PEs, credit rating agencies, and trade credit. I find a strong trade credit and PE certification effect on IPO underpricing with bank certification substituting for PE certification and adding to VC certification. Underwriter and VC certification reduces IPO spreads. Bank certification substitutes for underwriter and PE certification in spread regressions. The findings are robust to several model specifications and empirical methods, alleviating endogeneity concerns. The study contributes at the confluence of IPO underpricing, IPO spread, third-party certification, and the debt maturity structure literatures.
Recommended Citation
Shekhar, Shriya, "Essays On Bank Certification Of Initial Public Offerings" (2023). Wayne State University Dissertations. 3865.
https://digitalcommons.wayne.edu/oa_dissertations/3865
