Seize Growth Opportunities

Mar 29, 2018

Women Leading Research: Liu Yang

Liu YangSMITH BRAIN TRUST – Most startups aim to go public – to add value to the company or corporate founders and early investors. Further, an initial public offering can help diversify corporate ownership, while enabling the firm to obtain low-cost funds. On the other hand, such decentralized ownership is perceived to lead to agent conflicts and short-sighted investments. However, this caveat to going public is countered in new findings by professor Liu Yang at the University of Maryland’ Robert H. Smith School of Business.

“We show that public firms grow faster and respond more positively to positive demand shocks in the first five years post-IPO than birth-matched private firms,” write Yang and her co-authors, Smith finance professor Vojislav Maksimovic and Gordon Phillips at Dartmouth College’s Tuck School of Business, in the working paper “Do Public Firms Respond to Investment Opportunities More than Private Firms? The Impact of Initial Firm Quality.”  

Using U.S. Census Bureau data, the researchers tracked from birth 892,000 firms and compared the growth patterns between the firms that went public and their counterparts that remained privately held. They found a company’s initial conditions determined its growth path, the possibility of public offerings, and ability to respond to a sudden event that temporarily increases or decreases demand for its goods or services.

Within five years after the initial public offering, listed companies grew faster than matched non-listed companies and were more likely to grasp the growth opportunities. Afterward – the first five years following the IPO, the listed companies performed similarly to their non-listed counterparts.

The evidence suggests, write Yang and her co-authors, “that managerial myopia -- lack of imagination, foresight, which some believe characterizes public firms’ responses to investment opportunities, is not likely to be a significant counterweight to the benefits of being public.”

Liu Yang is an associate professor in finance at the University of Maryland’s Robert H. Smith School of Business. She is also executive director of the University of Maryland Federal Statistical Research Data Center.

Research interests: Corporate finance, including mergers and acquisitions, corporate restructuring, corporate governance, labor economics and financial institutions; influence of female leadership on gender wage gaps.

Selected accomplishments: 2013 and 2014 top 15 percent teaching award, UMD; 2011 research grant, Harold and Pauline Price Center for Entrepreneurial Studies, UCLA; 2010 research grant, Fink Center for Finance & Investment, UCLA; 2010 Best Paper in Corporate Finance, Financial Management Association Meetings; 2009 Best Paper, California Corporate Finance Conference.

Women Leading Research: Liu Yang

About this series: The Smith School faculty is celebrating Women’s History Month 2018 in partnership with ADVANCE, an initiative to transform the University of Maryland by investing in a culture of inclusive excellence. Daily faculty spotlights support activities from the school’s Office of Diversity Initiatives, starting with the seventh annual Women Leading Women forum on March 1, 2018.

Other fearless ideas from:  Rajshree Agarwal  |  Ritu Agarwal  |  T. Leigh Anenson  |  Kathryn M. Bartol  |  Christine Beckman  |  Margrét Bjarnadóttir  |  M. Cecilia Bustamante  |  Jessica M. Clark  |  Rellie Derfler-Rozin  |  Waverly Ding  |  Wedad J. Elmaghraby  |  Rosellina Ferraro  |  Rebecca Hann  | Amna Kirmani  |  Hanna Lee  |  Hui Liao  |  Jennifer Carson Marr  |  Wendy W. Moe  |  Courtney Paulson  |  Louiqa Raschid  |  Rebecca Ratner  |  Debra L. Shapiro  |  M. Susan Taylor  |  Niratcha (Grace) Tungtisanont  |  Vijaya Venkataramani  |  Janet Wagner  |  Yajin Wang  |  Yajun Wang  |  Liu Yang  |  Jie Zhang  |  Lingling Zhang

Image credit: scandinaviastock



About the Expert(s)


Liu Yang's primary research interest is in the area of corporate finance including mergers and acquisitions, investments, corporate governance, and labor and finance. Dr. Yang’s work has been published in all three leading academic journals in finance including the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies.

Vojislav (Max) Maksimovic

"Max" Maksimovic is the William A. Longbrake Chair in Finance & Professor of Finance. His recent research focuses on how a firm's organizational structure affects the flow of resources across its divisions. He has also worked on how competition in high technology industries determines the timing of initial public offerings.

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