Publications


Abstract: Using hand-collected data on top management team human capital (“management quality”) of a large sample of private firms, we analyze the effect of top management quality on pre-IPO innovativeness and the innovation strategies of these firms. We also analyze how management quality and pre-IPO innovation relate to these firms’ IPO characteristics. We hypothesize that firms with higher quality management teams invest in a greater proportion of long-term (innovative) projects, select better innovation projects, and manage innovation resources more efficiently, resulting in higher innovation productivity. We also hypothesize that such firms reap greater IPO market rewards. The evidence supports these hypotheses.  

Abstract: I examine the relationship between the availability of internal funds and the corporate decisions of firms with tangible assets. In the presence of frictions, a wedge exists between the costs of internal and external funds. Firms with collateral, such as real estate investment trusts (REITs), might face limited financing constraints for investment; however, changes in internal funds might still affect their corporate decisions other than investment, such as financing decisions and liquidity demand. The REIT Modernization Act of 2001 (RMA) lowered REITs' payout threshold from 95% to 90%, which represents a positive shock to internal funds. I find that, first, REITs lowered their dividend payout in response to the shock, which implies an increase in their internal funds, and second, while the shock did not affect REITs' investment or liquidity demand, it did reduce their additional security issuance and leverage. The results remain robust to a battery of additional empirical tests. 

Abstract: We make use of hand-collected data on a large sample of entrepreneurial firms going public to analyze the association between venture capital (VC) backing and the top management team (TMT) quality of firms at the time of their initial public offerings (IPOs), and the effect of both VC-backing and TMT quality on the growth in their post-IPO operating performance and IPO firm valuations. We first show that VC-backing is associated with higher TMT quality. We then show that both higher TMT quality and VC-backing lead to higher growth in post-IPO operating performance and higher IPO valuations. We find that the above two variables affect the growth in post-IPO operating performance through an “ability channel,” whereby the TMTs of such firms choose projects with higher equilibrium scale and implement them more ably. Further, TMT quality and VC-backing affect IPO firm valuations not only through the above ability channel, but also through a “certification channel,” whereby higher TMT quality and VC-backing credibly certify intrinsic firm value to the IPO market, thus reducing the extent of asymmetric information facing such firms in the IPO market and yielding these firms higher IPO valuations. Finally, we show that TMT quality and VC-backing act as complements in their effect on IPO firms’ growth in post-IPO operating performance.