UC Berkeley Haas Dissertation

Economic Consequences of Corporate Disclosures

Young Yoon 

Chapter I: The JOBS Act Did Not Raise IPO Underpricing

• A part of this chapter is co-authored with Omri Even-Tov and Panos Patatoukas and is published in the Corporate Finance Review (top 4 finance journal).

• Abstract: While the intended goal of the 2012 JOBS Act was to ease access to capital for Emerging Growth Companies (EGCs), prior studies, notably Barth et al. (2017), find evidence of an increase in IPO underpricing and a higher cost of equity capital for EGC issuers. Using a difference-in-differences design, I find that changes in overall IPO market conditions explain the seeming increase in IPO underpricing. In fact, EGC issuers that take advantage of the accounting disclosure relief afforded by the Act raise capital at higher pre-IPO multiples. These reduced-accounting disclosure EGCs have more speculative valuation profiles and lower institutional ownership and are more likely to destroy long-term shareholder value in the IPO aftermarket. Overall, this chapter offers an alternative perspective on the effect of the JOBS Act on IPO pricing.

Chapter II: Operating Lease Capitalization and Managerial Leasing Decisions (SSRN link)

• This chapter received the Best Paper Award at the 17th Haskell & White Corporate Reporting and Governance Conference.

• Abstract: I examine whether and how the recognition of operating leases on balance sheets influences managerial leasing decisions. In 2019 the FASB implemented ASC 842, which requires companies to capitalize operating leases. Given prior operating lease disclosure in footnotes, it was unclear if capitalization would affect financial statement users or managers. I find that firms' use of operating leases decreases upon the new standard's adoption and that this decline is driven by lease-intensive and less-levered firms. I also document a systematic substitution of operating leases with short-term and variable leases, both of which can still be left off balance sheet. The latter finding suggests that the FASB has not entirely succeeded in preventing firms from opportunistically omitting liabilities from balance sheets. My study responds directly to the FASB's call for research that examines the new standard's unintended consequences on managerial leasing decisions. Overall, I provide evidence that disclosure location (footnote vs. balance sheet) exerts a real effect on managerial behavior.

The full version of my dissertation is available here.