SEC reviews of IPO registration statement

This paper examines the determinants of SEC reviews of IPO registration statements (i.e. S-1 filings) for firms going public in U.S. capital markets between 2005 and 2017. This investigation is important because market participants rely on the information conveyed by S-1 filings and SEC comment letters when making formative investment decisions.
In terms of the relationship between the IPO firms’ characteristics and SEC S-1 review, the first empirical chapter provides evidence that bigger, older firms, firms with more segments, lower growth rates, engaging in M&A, using less external financing, reporting profits, having greater probabilities of bankruptcy and not audited by high-quality auditors are likely to experience more extensive SEC reviews. This study also identifies that the remediation costs covered by IPO firms are higher if they receive comments on core accounting, non-core accounting, business and disclosure issues, as compared with other issues (e.g., offering-related issues or corporate governance issues), and they are highest for firms receiving comments on core accounting issues. In addition, the increase in SEC review extensiveness for bigger firms, firms using more external financing and having greater financial distress are identified to be greater during the global financial crisis.