Date of Award

Spring 1-1-2013

Document Type


Degree Name

Doctor of Philosophy (PhD)



First Advisor

Alan D. Jagolinzer

Second Advisor

Steven Rock

Third Advisor

Yonca Ertimur

Fourth Advisor

Bjorn Jorgensen

Fifth Advisor

Mark Loewenstein


I examine whether the financial reporting quality of firms that access capital markets through a reverse merger differs from that of firms that rely on the traditional and more onerous IPO process. Using a broad sample of reverse merger firms and a propensity score matched sample of IPOs, I find that reverse merger firms uniformly exhibit lower earnings quality as captured by several earnings attributes established in prior literature: accrual quality, earnings persistence, earnings predictability, cash persistence, cash predictability, earnings smoothness, conservatism, timeliness, and value relevance. I further find that these differences are attenuated for reverse merger firms with higher levels of institutional ownership. This study informs about the role of regulators and institutional investors in financial reporting. Finally, given recent U.S. Securities and Exchange Commission (SEC) enforcement actions against Chinese reverse merger firms, I use a difference in differences technique and find that Chinese reverse merger firms exhibit higher financial reporting quality than all other reverse merger firms.