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Author : Sandra A. Ebeling
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (19 download)
Download or read book Empirical Tests of Corporate Financing Decisions written by Sandra A. Ebeling and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : S. M. Zahid
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.3/5 (83 download)
Download or read book Essays on Corporate Financing Decisions written by S. M. Zahid and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation explores firms' asset structure from different dimensions and investigates their impact of corporate financing decisions. In the first chapter of the dissertation, my coauthor and I investigate the impact of redeployability of long-term assets on corporate cash holdings. We find that firms with redeployable assets hold significantly less cash. To address the endogeneity concerns, we implement propensity score matching and entropy balancing. Our results to robust to this matching and balancing analysis. To address causality, we exploit the Russian Crisis of 1998 and find evidence of a causal effect of asset redeployability on corporate cash holdings. We also investigate the underlying mechanisms driving the relationship between asset redeployability and cash holdings. First, we find evidence that redeployability positively affects an asset's potential to be great collateral for acquiring external financing. To support the external financing argument, we find that firms with more redeployable assets have greater access to credit line facilities. Second, we find that asset redeployabilty gives firms an edge to sell corporate assets in the secondary market. This effect is more pronounced during industry downturns. Collectively, the evidence points to an important interplay between the liquidity of the short-term portion of the balance sheet and the long-term portion of the balance sheet.In the second chapter my co-author and I investigate the influence of intangible assets on corporate debt structure. We find that firms with intangible capital issue debt with shorter maturity and prefer unsecure debt over secure debt. To address the endogeneity concerns, we implement propensity score matching and entropy balancing. To find causal evidence, we implement an instrumental variable approach. We also investigate the underlying mechanisms through which intangible capital influence corporate debt structure. We find that agency conflict and information asymmetry as underlying mechanisms explaining the relationship between intangible capital and the maturity structure of corporate debt. We also find that demand for financial flexibility explain the relationship between intangible capital and unsecured debt. Overall, the evidence points to the impact of intangible capital in explaining the change in corporate debt structure in the last four decades.
Author : Yoonsoo Nam
Publisher :
ISBN 13 :
Total Pages : 140 pages
Book Rating : 4.5/5 (381 download)
Download or read book Essays on Corporate Financing Decisions written by Yoonsoo Nam and published by . This book was released on 2021 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: For the first chapter of this dissertation, I exploit the staggered enactment of U.S. state-level laws protecting outside directors from shareholder lawsuits. Following the laws' enactment, leverage ratios increase. This finding is consistent with a channel in which firms raise debt as a managerial control mechanism to counterbalance increased director protection. The documented relation is significant for firms where the control function of debt is more important, in which shareholders and takeover market participants are likely to influence managerial decisions, and that are unlikely to be constrained in financial markets. Firms increasing leverage raise dividends, decrease cash holdings, and offset the value loss stemming from reduced monitoring. For the second chapter, my coauthors and I find that product market threats measured by market fluidity increase lease financing, which is consistent with the channel that leasing tangible assets enables firms to increase their net worth when facing adverse cash flow shocks. We address endogeneity by adopting import tariff rates as an instrumental variable and additionally employing instrumented Chinese import penetration ratio as an alternate measure of product market threats. We further show that our documented positive relation between product market threats and leases is more significant for the subsamples of firms that are less financially flexible, that have lower operational flexibility, and that face lower tax rates. In further analyses, we find that firms raising leases in response to increased product market threats grow faster, which offsets profitability erosion stemming from heightened product market threats. These firms also increase leverage, a finding that complements theoretical predictions in recent literature.
Author : Yi Jiang
Publisher :
ISBN 13 :
Total Pages : 244 pages
Book Rating : 4.:/5 (476 download)
Download or read book Essays on Corporate Financing and Investment Decisions written by Yi Jiang and published by . This book was released on 2009 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Hoang Van Vu
Publisher :
ISBN 13 :
Total Pages : 310 pages
Book Rating : 4.:/5 (11 download)
Download or read book Essays in Corporate Financing and Investment Decisions written by Hoang Van Vu and published by . This book was released on 2015 with total page 310 pages. Available in PDF, EPUB and Kindle. Book excerpt: The evolution of corporate debt markets in recent decades, especially short-term debt facilities and bank debt, has made funding more accessible for corporate borrowers. On the other hand, the changing environment of debt markets also creates new challenges for corporate borrowers. First, as the debt maturity structure has become shorter, companies face higher liquidity pressure. Second, since banks also increasingly rely on short-term wholesale funding, the maturity mismatch of bank assets and liabilities has widened, further increasing economy-wide liquidity risk. These problems were illustrated by the most recent liquidity crisis that lasted from 2007 to 2009. Understanding the implications of borrowing using short-term debt therefore is crucial for the modern corporate finance. Moreover, the issues regarding the maturity mismatch of the banking sector imply that fluctuations in bank credit might increase, as banks become more sensitive to liquidity constraints. This thesis explores a number of issues regarding the use of short-term debt by non-financial companies, as well as the implications of fluctuations in bank credit for corporate financial and investment policies. The thesis contains three empirical research essays, presented individually in Chapters 2, 3 and 4. The first essay investigates the implications of debt maturity structure on corporate investment activities in the presence of firm specific default risk. The second and the third essays examine the implications of bank credit cycles on corporate activities. Essay 2 studies the effect of bank credit cycles on firms' choice of external financing issues, whereas Essay 3 examines the effect of bank credit on corporate liquidity management policies and the spending on different types of investment.
Download or read book Three Essays in Dynamic Corporate Finance written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The three essays constituting this thesis focus on financing and cash management policy. The first essay aims to shed light on why firms issue debt so conservatively. In particular, it examines the effects of shareholder and creditor protection on capital structure choices. It starts by building a contingent claims model where financing policy results from a trade-off between tax benefits, contracting costs and agency costs. In this setup, controlling shareholders can divert part of the firms' cash ows as private benefits at the expense of minority share- holders. In addition, shareholders as a class can behave strategically at the time of default leading to deviations from the absolute priority rule. The analysis demonstrates that investor protection is a first order determinant of firms' financing choices and that conflicts of interests between firm claimholders may help explain the level and cross-sectional variation of observed leverage ratios. The second essay focuses on the practical relevance of agency conflicts. De- spite the theoretical development of the literature on agency conflicts and firm policy choices, the magnitude of manager-shareholder conflicts is still an open question. This essay proposes a methodology for quantifying these agency conflicts. To do so, it examines the impact of managerial entrenchment on corporate financing decisions. It builds a dynamic contingent claims model in which managers do not act in the best interest of shareholders, but rather pursue private benefits at the expense of shareholders. Managers have discretion over financing and dividend policies. However, shareholders can remove the manager at a cost. The analysis demonstrates that entrenched managers restructure less frequently and issue less debt than optimal for shareholders. I take the model to the data and use observed financing choices to provide firm-specific estimates of the degree of managerial entrenchment. Using structural econometrics, I find costs of contro.
Author : Pavel Zryumov
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (911 download)
Download or read book Essays in Corporate Finance written by Pavel Zryumov and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis studies the investment and financing decisions of firms in dynamic markets with asymmetric information. In the first chapter I analyze the effects of time-varying market conditions and endogenous entry on the equilibrium dynamics of markets plagued by adverse selection. I show that variation in gains from trade, stemming from market conditions, creates an option value and distorts liquidity when gains from trade are low. An improvement in market conditions triggers a wave of high-quality deals due to the preceding illiquidity and lack of incentives to signal quality. When gains from trade are high, the market is fully liquid; high prices and no delay in trade attract low-grade assets, and the average quality deteriorates. My analysis also reveals that illiquidity can act as a remedy as well as a cause of inefficiency: partial illiquidity allows for screening of assets and restores efficient entry incentives. I demonstrate model implications using several applications: early stage financing, initial public offerings, and private equity buyouts. Chapter 2, which is a joint work with Ilya Strebulaev and Haoxiang Zhu, reexamines the classic yet static information asymmetry model of Myers and Majluf (1984) in a fully dynamic market. A firm has access to an investment project and can finance it by debt or equity. The market learns the quality of the firm over time by observing cash flows generated by the firm's assets in place. In the dynamic equilibrium, the firm optimally delays investment, but investment eventually takes place. In a ``two-threshold'' equilibrium, a high-quality firm invests only if the market's belief goes above an optimal upper threshold, while a low-quality firm invests if the market's belief goes above the upper threshold or below a lower threshold. However, a different ``four-threshold'' equilibrium can emerge if cash flows are sufficiently volatile. Relatively risky growth options are optimally financed with equity, whereas relatively safe projects are financed with debt, in line with stylized facts. Finally, Chapter 3, which is based on an ongoing work with Ilya Strebulaev and Haoxiang Zhu, extends the analysis of Chapter 2 by allowing cash accumulation within the firm. We consider a firm whose managers possess superior information about the firm's value relative to the rest of the market and analyze the optimal timing of equity issuance. We show that equilibrium features socially inefficient, but privately optimal, delay of investment and equity financing of positive NPV projects. Waiting allows high quality firms to accumulate internal cash and increase investors' beliefs, therefore, reducing the cost of adverse selection. In the dynamic equilibrium low quality firms delay investment as well in hope of being mistaken for the high quality ones. However, when market beliefs are sufficiently low and/or internally accumulated level of cash is sufficiently high the low quality firm prefers to reveal itself.
Author : Priit Sander
Publisher :
ISBN 13 : 9789949117659
Total Pages : 178 pages
Book Rating : 4.1/5 (176 download)
Download or read book Essays on Factors Influencing Financing Decisions of Companies written by Priit Sander and published by . This book was released on 2007 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Shage Zhang
Publisher :
ISBN 13 :
Total Pages : 200 pages
Book Rating : 4.:/5 (881 download)
Download or read book Three Essays in Empirical Corporate Finance written by Shage Zhang and published by . This book was released on 2012 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Brian Gibbons
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (125 download)
Download or read book Essays on Corporate Finance and Disclosure written by Brian Gibbons and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three essays. In the first essay, I document that disclosure of financially immaterial environmental and social (E&S) information has material effects on firms' investment and financing decisions using the staggered introduction of 87 country-level regulations that mandate firms report such information. Firms domiciled in countries that mandate E&S transparency increase R&D expenditures and patenting activity after disclosing. Transparent non-financial disclosure reduces financing frictions, resulting in more innovation for equity-dependent firms and increased reliance on external equity. It also improves shareholders' contracting and monitoring abilities, incentivizing managers to invest in innovation. Fixed capital investment, which is less sensitive to information frictions, does not change following E&S disclosure. Additionally, I only observe changes to investment and financing decisions when E&S disclosure is mandatory--highlighting the unique value of consistent and comparable disclosure. In the second essay, I study venture capital firms (VCs) use of public market information and how attention to this information relates to their private market investment outcomes. I link web traffic to public disclosure filings hosted on the Security and Exchange Commission's (SEC's) EDGAR server to individual VCs. VCs analyze public information before most deals. An increase in EDGAR filing views relates positively to the probability of an exit through acquisition, suggesting that public information helps identify paths to acquisition. The effect is stronger when the VC has less access to private information. I conclude that policymakers should consider spillover effects on private markets when setting public disclosure requirements. In the third essay, we identify analysts' information acquisition patterns by linking EDGAR server activity to analysts' brokerage houses. Analysts rely on EDGAR in 24% of their estimate updates, with an average of eight filings viewed. We document that analysts' attention to public disclosure is driven by the demand for information and the analysts' incentives and career concerns. We find that information acquisition via EDGAR is associated with a significant reduction in analysts' forecasting error relative to their peers. This relationship is likewise present when we focus on the intensity of analyst research. Attention to public information further enables analysts to provide forecasts for more time periods and more financial metrics. Informed recommendation updates are associated with substantial and persistent abnormal returns, even when the analyst accesses historical filings. Analysts' use of EDGAR is associated with longer and more informative analyses within recommendation reports.
Author : İrem Demirci
Publisher :
ISBN 13 :
Total Pages : 200 pages
Book Rating : 4.:/5 (857 download)
Download or read book Essays on Business Relations and Corporate Finance written by İrem Demirci and published by . This book was released on 2013 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the impact of business relations on firms' financing decisions. The goal is to understand the determinants of business relations and how they interact with firms' capital structure. In the first chapter, I present a model which studies the role of customer risk in suppliers' financing choice. The base model predicts that when faced with a high-risk customer, suppliers with significant continuation values prefer equity over debt. The extended model allows for analyzing the supplier's decision to concentrate on a single major customer or diversify into multiple customers. The model shows that by decreasing the risk of premature liquidation, diversification allows for the supplier to take advantage of the bargaining benefits of debt. The second chapter empirically investigates the impact of customer risk on suppliers' capital structure. Consistent with the model presented in the first chapter, both cross-sectional and time-series regression results show that customer risk has a negative impact on suppliers' debt financing. Customer risk is an important determinant of suppliers' method of financing as well. During the first two years of the relationship, suppliers with high-risk customers are more likely to raise equity. Comparing the impact of customer risk on different supplier groups shows that firms that operate in concentrated industries and younger firms are more sensitive to changes in customer risk. In further analyses I find that the risk is transferred from customers to suppliers: There is a lead-lag relationship between customer and supplier credit rating changes. Also, suppliers experience an increase in volatility of their stock returns after they start a new relationship with a risky customer. Results from further analyses are suggestive of customer risk affecting capital structure through its impact on supplier risk.
Author : Hui Zheng
Publisher :
ISBN 13 :
Total Pages : 186 pages
Book Rating : 4.:/5 (81 download)
Download or read book Essays in Behavioral Corporate Finance written by Hui Zheng and published by . This book was released on 2012 with total page 186 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation explores the extent to which managerial overconfidence affects corporate decisions. This analysis includes three essays, which address a wide range of corporate decisions including financing, investment, acquisition, innovation, liquidity management and advertising decisions. The first essay introduces a fine-tuned test of the relationship between managerial overconfidence and corporate decisions by taking the chief financial officer (CFO) overconfidence effect into account. Ex-ante, I identify financial policies and non-financial policies such as investment, innovation and acquisition as the primary managerial duties of CFOs and chief executive officers (CEOs) respectively. I construct overconfidence measures for both CEOs and CFOs and test the impact of CEO and CFO overconfidence, both on financial decisions and on nonfinancial decisions. Based on a sample of 1,173 S & P 1500 firms, I find that financial policies are primarily affected by CFO overconfidence while only CEO overconfidence affects nonfinancial decisions. My findings demonstrate that managerial biases affect corporate decisions and managerial duties shape the ways in which top managers influence corporate policies. The second essay investigates how overconfident CEOs allocate resources toward innovation activities. It argues that overconfident CEOs tend to have greater innovation input. To finance innovation, they save more cash out of the cash flow and spend more on innovation when the cash flow is high. Results from an empirical analysis of 1,015 S & P 1500 firms support this argument. Moreover, based on a series of financial constraint measurements, the effect of CEO overconfidence on liquidity management is found to be more pronounced in financially constrained firms and in highly innovative firms, but not in firms without financial constraints. With regards to innovation performance, overconfident CEOs tend to have more patents, but the overall quality of their patents is not significantly better than that of rational CEOs. The third essay introduces a simple model of firm advertising behavior in monopolistic competition industries and applies it to the situation of managerial overconfidence. The model shows that the optimal advertising to sales ratio is determined by both firm advertising competency and consumer preference. Overconfident CEOs are more willing to use advertising as a means to convey the quality of their firms and products. Such overestimation of the effects of advertising by overconfident CEOs will result in overspending on advertising. When financially constrained, an overconfident CEO's tendency to overspend will be curbed to some extent, but his amount of advertising will increase with cash flows. An empirical analysis of 654 S & P 1500 firms supports these predictions. The distorted effect of managerial overconfidence is more prominent when firms are financially constrained and when the overconfidence measure is continuous.
Author : Jie Lian
Publisher :
ISBN 13 :
Total Pages : 216 pages
Book Rating : 4.:/5 (66 download)
Download or read book Two Essays on Corporate Finance written by Jie Lian and published by . This book was released on 2010 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two essays on corporate finance. Essay one examines whether corporate governance affects firm performance after capital investments. I find that among firms with weak corporate governance, those with high abnormal capital investments have significantly lower stock performance than those with low abnormal capital investments. In addition, a significant portion of the difference in abnormal stock performance between the two subgroups occurs around earnings announcements. In contrast, the level of abnormal capital investments is not related to subsequent stock performance or earnings announcement returns at firms with strong corporate governance. These findings indicate that corporate governance structure enhances firm value by mitigating the over-investment problem. Essay two examines how insider trading activity prior to seasoned equity offerings (SEOs) is related to subsequent investment, operating, and financing decisions of the issuer. I find that SEO firms with more abnormal insider sales issue more seasoned equity, hold more cash and increase dividend payouts more. They also perform more poorly. Following the SEO, these firms also issue less equity and the effects of the SEO on their capital structures gradually reverses. These findings suggest that SEO firms with more abnormal insider sales are more likely to have overpriced stock, while those with less abnormal insider sales are more likely to have good investment opportunities. Insider trading activity prior to the SEO provides valuable information about the firm's incentives to issue seasoned equity and help to predict the real activities of the issuer following the SEO.
Author : Neill Killeen
Publisher :
ISBN 13 :
Total Pages : 147 pages
Book Rating : 4.:/5 (129 download)
Download or read book Essays on Corporate Finance and Firms' Investment Decisions written by Neill Killeen and published by . This book was released on 2018 with total page 147 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Rita Biswas
Publisher : Emerald Group Publishing
ISBN 13 : 1789733898
Total Pages : 168 pages
Book Rating : 4.7/5 (897 download)
Download or read book Essays in Financial Economics written by Rita Biswas and published by Emerald Group Publishing. This book was released on 2019-10-24 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume, dedicated to John W. Kensinger, explores a variety of topics in financial economics, including firm growth, investment risks, and the profitability of the banking industry. With its global perspective, Essays in Financial Economics is a valuable addition to the bookshelf of any researcher in finance.
Author : Joon Ho Kim
Publisher :
ISBN 13 :
Total Pages : 92 pages
Book Rating : 4.:/5 (878 download)
Download or read book Two Essays on Corporate Finance written by Joon Ho Kim and published by . This book was released on 2013 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation focuses on the effect of financial market frictions on firm value in the context of corporate mergers, capital structure and growth. The first chapter explores how financing frictions faced by potential buyers of industry specific real assets affect the transaction value of merger targets that consist of such assets. I find that shareholders of target firms with highly specialized assets receive a significantly smaller premium than targets with generic assets when industry peer firms are financially constrained. Further investigation reveals that firms with specialized assets reduce leverage more than other firms when the risk of liquidation loss is high. The second chapter explores how frictions in the financial market affect corporate capital structure and growth. I present evidence that firms that have experienced financing frictions prior to entering the public debt market undergo significant changes in capital structure and investment as they gain access to the new sources of capital. Overall, the findings in this dissertation highlight the importance of financing frictions as key determinants of capital structure and firm value.
Author : Lin William Cong
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (881 download)
Download or read book Essays in Corporate Finance and Investment written by Lin William Cong and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of two essays that examine several problems in corporate finance and mechanism design. The central theme is endogenous agency conflicts and their impact on dynamic investment decisions. The first essay features auctions of assets and projects with embedded real options, and subsequent exercises of these investment options. The essay shows timing and security choice of auctions endogenously misalign incentives among agents and derives the optimal auction design and exercise strategy. The second essay studies implications of endogenous learning on irreversible investment decisions, in particular, how learning gives rise to asymmetric information between managers and shareholders in decentralized firms. Depending on the quality of the project, the optimal contract between principal and agent distorts investments in ways that has not been examined in the literature. Specifically, in Chapter 1 of the dissertation, I study how governments and corporations auction real investment options using both cash and contingent bids. Examples include sales of natural resource leases, real estate, patents and licenses, and start-up firms with growth options. I incorporate both endogenous auction initiation and post-auction option exercise into the traditional auctions framework, and show that common security bids create moral hazard because the winning bidder's real option differs from the seller's. Consequently, investment could be either accelerated or delayed depending on the security design. Strategic auction timing affects auction initiation, security ranking, equilibrium bidding, and investment; it should be considered jointly with security design and the seller's commitment level. Optimal auction design aligns investment incentives using a combination of down payment and royalty payment, but inefficiently delays sale and investment. I also characterize informal negotiations as timing and signaling games in which bidders can initiate an auction and determine the forms of bids. I show that post-auction investments are efficient and bidding equilibria are equivalent to those of cash auctions. However, in this setting, bidders always initiate the informal auctions inefficiently early. In addition, I provide suggestive evidence for model predictions using data from the leasing and exploration of oil and gas tracts, which leads to several ongoing empirical studies. Altogether, these results reconcile theory with several empirical puzzles and imply novel predictions with policy relevance. In Chapter 2, I examine learning as an important source of managerial flexibility and how it naturally induces information asymmetry in decentralized firms. Timing of learning is crucial for investment decisions, and optimal strategies involve sequential thresholds for learning and investing. Incentive contracts are needed for learning and truthful reporting. The inherent agency conflicts alter investment behavior significantly, and are costly to investors and welfare. But contracting on learning restores efficiency with low future uncertainty or sufficient liquidity. Unlike prior studies, the moral hazard of learning accelerates good projects and delays bad projects. Even the best type's investment is distorted, and only when learning is contractible can adverse selection dominate learning.
