Biyu WuFollow

Date of Completion


Embargo Period



Initial public offerings, restatements, securities litigation

Major Advisor

Mike Willenborg

Associate Advisor

Assaf Eisdorfer

Associate Advisor

David Weber

Associate Advisor

Yanhua (Sunny) Yang

Field of Study

Business Administration


Doctor of Philosophy

Open Access

Campus Access


I compare litigation risks associated with restated IPO prospectus financial statements and a matched sample of restated non-IPO financial statements. I find that investors are 9.4% more likely to sue IPO companies than non-IPO companies and that the higher litigation rate in IPOs stems from companies with error-type restatements. In addition, I find IPO suits are more likely to be settled than non-IPO suits. Overall, these results are consistent with plaintiff attorneys’ incentives driving the filing of lawsuits and suggest a potential explanation for why IPO issuers provide higher quality financial reporting. The prospect of higher litigation risk provides ex ante incentives for IPO companies to mitigate accounting errors and thus improve financial reporting quality compared to non-IPO companies. However, my findings provide scant support for the inference that higher monitoring by litigants provides more incentives for IPO companies than non-IPO companies to mitigate accounting irregularities.

Available for download on Saturday, May 26, 2018