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Three Essays On Financial Policy Of A Firm
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Book Synopsis Three Essays on Financial Policy of a Firm by : Yelena Larkin
Download or read book Three Essays on Financial Policy of a Firm written by Yelena Larkin and published by . This book was released on 2012 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first chapter of the dissertation analyzes how characteristics of a firm's brand affect financial decisions by using a proprietary database of consumer brand evaluation. It demonstrates that positive consumer attitude alleviates financial frictions by providing more net debt capacity, as measured by higher leverage and lower cash holdings. Brand perception reduces the overall riskiness of a firm, as strong consumer evaluations translate into lower future cash flow volatility, higher Z-scores, and better performance during recession. Creditors favor strong brands by demanding lower yields on corporate public bonds. The results are more pronounced among small firms and non-investment grade bonds, contradicting a number of reverse causality and omitted variables explanations. The second chapter develops a framework that shows how exactly market timing and trade-off forces coexist. The idea is that market timing benefits dominate trade-off costs when firms are close to their target leverage, but become offset by the rebalancing considerations when firms are farther away. Two sets of empirical results support the validity of the framework. First, the sensitivity of equity issuances to past stock performance is the highest among firms close to the target leverage. Second, the long-run performance of equity issuers is also a function of their deviation from target leverage. The lower the leverage of issuing firms is relative to the target, the worse their after-issuance returns are, consistent with higher market timing incentives compared to other issuers. The third chapter studies whether investors value dividend smoothing stocks differently by exploring the implications of dividend smoothing for firms' expected returns and their investor clientele. First, it demonstrates that dividend smoothing is associated with lower average stock returns in both univariate and multivariate settings. Some of this return differential can be attributed to lower risk, captured by return comovement among high (low) smoothing firms. Second, the chapter shows that institutional investors, and specifically, mutual funds, are more likely to hold dividend smoothing stocks. Last, firms that smooth their dividends issue equity more frequently. Together, these results are consistent with the role of dividend smoothing in mitigating the impact of agency conflicts on the cost of capital.
Book Synopsis Three Essays on Corporate Finance and Financial Institutions by : Yan Wang
Download or read book Three Essays on Corporate Finance and Financial Institutions written by Yan Wang and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: "This dissertation consists of three essays. The first essay provides a systematic way to distinguish informed institutional trades from uninformed ones based on the relation between institutional trades and sequential public information. By studying actively managed U.S. institutions from 1994 to 2010, I show that institutional trades initiated by managers responding proactively to upcoming informational signals strongly predict future stock returns. A hedging portfolio based on these trades generates an average risk-adjusted abnormal return of approximately 3% per quarter. The predictability is more pronounced for stocks with higher information asymmetry, such as those of firms with high volatility and young age. I also find that the most informed institutional traders are likely to have short-term investment horizon, large block holdings, high industry portfolio concentrations, as well as reside in financial centers. My results indicate that the informedness of certain institutional investor groups is substantially reduced after Regulation FD. The second essay examines the product market impact of minority stake acquisitions. We show that partial equity ownership between rival firms has a significant impact on industry competition. Industry-level tests indicate that acquisitions of a minority stake in competing firms' equity are followed by higher output prices and higher price-cost margins, particularly in industries with high barriers to entry. Stock-price reactions of non-participating competitors of the acquirer and target are positive while announcement returns of customer firms are negative. Moreover, the positive (negative) stock-price reaction of competitors (customers) is more pronounced when the acquirer and target are larger firms with greater market share. These results indicate that equity ownership of rival firms dampens competition in an industry.The third essay examines whether foreign firms by listing on or delisting from regular U.S. stock exchanges affect their U.S. counterparts. We find that they do - negatively for listings and positively for delistings, - and the impact is especially profound for the listing events. The U.S. counterparts of foreign firms belonging to the same industry experience severe underperformance in the short- and long-run across a variety of financial and accounting performance metrics, such as firm returns as well as growth in sales, profits, total assets, and capital expenditures. For example, the average 60-day cumulative abnormal return of U.S. firms around the foreign listing date is negative 2%, while the 36-month post-listing return is negative 4.3%. This result is present among listings with and without U.S. equity issuance. In addition, incumbent U.S. firms experience changes in their financing policies and a reduction in analyst coverage following listings of competing foreign firms in the U.S. Our findings therefore highlight an important role of international markets in influencing U.S. firms and markets. " --
Book Synopsis Three Essays about the Financial Impact of Top Managers on Firm by : Young Han Kim
Download or read book Three Essays about the Financial Impact of Top Managers on Firm written by Young Han Kim and published by . This book was released on 2009 with total page 466 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on Financial Markets and Monetary Policy by : Conglin Xu
Download or read book Three Essays on Financial Markets and Monetary Policy written by Conglin Xu and published by . This book was released on 2011 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Corporate Finance by : Bernardino Manuel Pereira Adão
Download or read book Three Essays in Corporate Finance written by Bernardino Manuel Pereira Adão and published by . This book was released on 1995 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on Network Peer Effects on Firms and Financial Markets by : Bahman Fathi Ajirloo
Download or read book Three Essays on Network Peer Effects on Firms and Financial Markets written by Bahman Fathi Ajirloo and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays that address recent topics in corporate finance that concern for scholars, policymakers, and investors. Main body of this dissertation has been developed based on the "nexus of contracts" theory of the firm which in recent years has sparked renewed debates on the motivation underlying firm size and boundary. The first essay explores a network of interconnected firms and examines the impact of the firm's relationships with peers, rivals, and customers on its capital structure, and how the firm's revealed peers influence its financing decisions. We demonstrate that industry classification approach is fraught with measurement error, and instead implement an alternative peer identification scheme that designates peer groups as those explicitly disclosed by managers to shareholders. The results contrast with previous studies that find only weak evidence for peer effects on capital structure. We find that peer effects are particularly strong when focal firms have persistent rivals, in the sense of supplying common customers for at least two consecutive years. While constructing the firm's actual network poses a challenge, the new approach can lead to more real-world insights about firm behavior. In the second essay, I approach to a challenging version of peer effects model with firm's and peer's multinomial decision outcome as endogenous and financial fundamentals as exogenous explanatory variables. I show that managers do not set dividend policy independently and they are significantly under the influence of few self-disclosed diverse competitors rather than industry peers. The test results show that firm's dividend change actions are significantly correlated with past dividend actions of its peers and it is highly predictable for the next period. I also investigate and report marginal effects of firm's and peers' different endogenous and exogenous determinants on the outcome decision variable for example a peer group with an overall dividend increase action in the past 180 days, increases the chance of the dividend increase in the focal firm. Considering the market capitalization of dividend paying firms, the identified marginal effects and prediction of the cash distribution are economically meaningful and important. In the third essay, I propose a new approach to model and measure intangible value of the firm as the joint of network feature and book value of the firm. Despite the growing importance, the empirical asset pricing research has struggled to evaluate the effects of intangible assets on firms' market value. Utilizing characteristics of the firm network, I propose a network-centric value factor to replace the under-performing traditional value factor (HML) in a series of asset pricing factor model. I show that the new value factor portfolio provides stronger performance in all periods of the sample. I also explore short and long strategies to better understand effects of the networks on value of the firms. Initial findings emphasize that asset pricing studies should adjust the factor models by including intangible network value of the firm.
Book Synopsis Three Essays on Monetary Policy and Financial Development by : Xiaodai Xin
Download or read book Three Essays on Monetary Policy and Financial Development written by Xiaodai Xin and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: Both economic growth and stabilization require a well-functioning financial system, which includes the central bank and private financial institutions. This dissertation is comprised of three essays on monetary policy and financial development which are related to the roles of the central bank and private financial institutions. To better stabilize the economy, a central bank needs to formulate an optimal strategy for monetary policy and pursues an appropriate objective (targeting regime). In a forward-looking New Keynesian model with persistent output and inflation, the first essay (chapter 2) evaluates a broad hybrid targeting regime when the central bank operates under discretionary monetary policy. By employing the numerical analysis and comparing the performance of different targeting regimes, I find that the hybrid targeting regime yields a social loss closest to that under the optimal committed policy, generating a better outcome than other policy regimes. The second essay (chapter 3) provides new micro-level evidence for the positive relationship between financial development and economic growth based on a large sample of cross-country firm-level data. By examining an important micro channel through which financial development reduces the costs of external finance to firms, I find that firms that are more externally dependent grow faster in countries with more developed financial systems. The third essay (chapter 4) investigates the impact of external debt on long-term investment and its interaction with domestic financial intermediation in emerging markets. Extending the Ramsey-Cass-Koopmans model to a small open economy with the role of financial intermediation, I find that the overall effect of a high level of external debt on investment depends heavily on the degree of domestic financial intermediation. Using a large sample of panel data on 76 developing countries over the last three decades, the empirical results indicate that when a country's domestic banking sector develops to a certain degree, the high level of external debt facilitates investment.
Book Synopsis Three Essays on Financial Markets by : Pawan Jain
Download or read book Three Essays on Financial Markets written by Pawan Jain and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is composed of three essays. The first essay investigates the information content of the limit order book (LOB) on the Shanghai Stock Exchange (SHSE), a purely order-driven market, for predicting future stock price volatility. We find that the LOB supply schedule consistently and significantly predicts the future price volatility. But this predictive power of LOB declines during the extreme market wide movements. We also find that buy orders are more informative over future price volatility than sell orders but sell (buy) orders becomes more informative during the extreme market wide down (up) movement days. Finally, we document that predictive power of LOB is short lived and markets are efficient over the longer time horizon. The second essay examines the effect of high frequency trading on market quality, systemic risk and trading strategies. In 2010 the Tokyo Stock Exchange, the largest exchange headquartered outside the US, introduced a new trading platform, Arrowhead, which reduced latency by 99.97% and increased co-located high-frequency trading from zero to 36% of volume. Arrowhead improved market liquidity and reduced volatility, but it also amplified systematic risks factors like quotes to trade ratio, order-flow autocorrelation and cross correlation, and tail risks. Arrowhead also affected trading strategies by increasing trade price predictability and the use of fleeting orders. Cost of immediacy serves as a channel through which reduced latency affects market quality, systematic risks, and trading outcome. The third essay analyzes the links between corporate finance policies and investment clienteles by comparing the cross-sectional variation in the dividend payout policies of companies across 32 countries. Beyond the impact of firm-specific accounting and financial variables, this study investigates how the country level variations: shareholder demand due to demographic variations and consumption needs, agency problems manifested in the extent of minority shareholder protection and business disclosures, and market quality in terms of transparency and liquidity; affect dividend payout policies. We find that firms have generous dividend payout policies when diverse shareholder demands are strong, extents of business disclosures and legal protections are weak, and the market qualities are poor. The empirical evidence supports the presence of strong dividend clienteles in a global setting. .
Book Synopsis Three Essays on the Influence of National Culture on Corporate Finance by : Vipin Mogha
Download or read book Three Essays on the Influence of National Culture on Corporate Finance written by Vipin Mogha and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The premises of this doctoral dissertation is investigating the role played by national culture on corporate financial choices and outcomes. The investigation is done through three empirical essays. The first essay analyzes the influence of national culture on firms' capital structure choices. The second essay is analyzing the role played by national culture on firms extending more or less trade credit from pre-to-post the mortgage financial crisis. The third essay analyzes the influence of national culture on firms' market value. Furthermore, a chapter of theoretical conceptualization is done to fit these empirical essays work into a mathematical topology framework. This doctoral dissertation work finds itself at the junction of three broad sets of research bodies. These are the literature around the New Institutional Economics (NIE), the finance literature, and the social economics literature. We glue these literature sets together through the general mathematical topology framework to structure our culture and finance research. Chapter 2 introduces these literature sets and describes the foundations of our three essays.Chapter 3 (essay one) presents the analysis of the links between national culture and firms financing choices leading to their capital structure. Chapter 4 (essay two) presents the analysis of culture's influence on firm's choice of extending higher or lower trade credit from pre-to-post the 2008 mortgage financial crisis. Chapter 5 (essay three) presents how firms' financial value maybe influenced national cultural values.National culture is defined as the firm's country-of-origin cultural values. We represent it by four of Hofstede (1980, 2001) six cultural dimensions of individualism, masculinity, uncertainty avoidance, and long-term orientation. Hofstede national culture dimensions are largely applied in the growing culture and finance literature, thus providing strong empirically validity. Our choice of Hofstede dimensions are described in chapter 2.We apply these cultural dimensions in our three essays. Our empirical analysis is build following the New Institutional Economics framework (Williamson, 2000). This framework is the key structure around which we are able to build the theoretical bodies of our three essays. NIE has popularized the understanding and acceptance of the non-financial constraints -in macro-and-micro economics- of the social embeddedness level of culture. We empirically test the hypotheses in our three essays following Williamson NIE framework. The empirical tests are done on samples of listed firms from over 30 countries. These tests provide a broad applicability of our results to firms in the globalized economy. The results of our three essays meet our hypotheses expectations of culture's influence on firms' financial choices and outcomes.The results provide all stakeholders a lens to view and analyze corporate financial choices and outcomes through firms' national culture values. Indeed, the financial numbers one may read may have different meaning depending on firm's country-of-origin cultural values. This understanding would have multiple implications for investors, creditors, managers, shareholders, and policy makers. It may help them in their investing, lending, financing, returns expectations, and policy design to optimize their profits.
Book Synopsis Three Essays in Corporate Finance by : Zhehao Jia
Download or read book Three Essays in Corporate Finance written by Zhehao Jia and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Dynamic Corporate Finance by :
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.
Book Synopsis Three Essays on Investments and Corporate Finance by : Marc Antony Via
Download or read book Three Essays on Investments and Corporate Finance written by Marc Antony Via and published by . This book was released on 2014 with total page 207 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays on investments and corporate finance. The first essay is an investment article focused on factors affecting market makers in the trading of securities, the second essay is a corporate finance article which empirically tests theories of what factors motivate executives to innovate, while the third essay is a corporate finance article which empirically tests theories of why returns are higher in firms with high organization capital investments. For the first essay, I evaluate the shift in the duration of legal insider trading and asymmetric information after Sarbanes Oxley, and find that market makers can identify asymmetric trading via the PIN measure and abnormal volumes and adjust spreads accordingly. This study is the first to consider the duration and accuracy of asymmetric trading and their effects on bid ask spreads. The second essay considers executive incentives to innovate based on firm governance and compensation policies. Basically it seeks to empirically test the theoretical predictions of Manso (2011). Manso theorizes that the individual choice of management to innovate is motivated by a firm tolerance for early failure, as innovations often struggle along their development paths. Ultimately, I find empirical support for many of the predictions of Manso. The third essay addresses how the threat of talented employee departure from firms affects firm risk. Eisfeldt and Papanikoloau (2013) introduced the idea that the threat of the loss of key talent may increase risk for firms with high levels of organization capital. However, they do not provide direct evidence that this risk increase is due to this employment threat, and other literature has suggested that SG & A risk is from management inability or unwillingness to reduce costs. I add to this debate by testing the movement of inventors between firms, and find strong support for the theories of Eisfeldt and Papanikolaou (2013).
Book Synopsis Three Essays in Empirical Corporate Finance by : Poorya Kabir
Download or read book Three Essays in Empirical Corporate Finance written by Poorya Kabir and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation presents three essays in empirical corporate finance. The essays discuss how financial markets affect the real economy. The first essay studies how a change in credit supply affects firms' decisions to create new products or destroy the existing ones. It provides reduced form causal evidence that a reduction in credit supply reduces product creation substantially. The second essay studies the effect of less product creation on consumer welfare. I find that the effect on consumer welfare is smaller relative to a "naive" interpretation of the reduced form estimate, due to equilibrium responses. The third essay studies how financially constrained firms reduce total investment costs. It provides suggestive evidence that when reducing total investment cost, they do so by lowering the expansion of output capacity and choosing cheaper investment options.
Book Synopsis Three Essays in Corporate Finance by : Jeong Hwan Lee
Download or read book Three Essays in Corporate Finance written by Jeong Hwan Lee and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: My model yields the following main results: (1) Equity issues are pro-cyclical, and concentrated for small, low profit, and large investment demand firms in earlier stage of economic upturns. (2) Payouts peak in later stages of upturns and co-move positively with equity issues; (3) Debt policies move counter-cyclically, and leverage ratios after debt issuance and retirement are even higher during economic downturns. My comparative static analysis predicts pro-cyclical debt policy for financially constrained firms, and pervasively conservative use of debt for firms expecting financial market shutdowns, a sharp profitability drop, or a longer stay in economic downturns.
Book Synopsis Three Essays in Empirical Corporate Finance by :
Download or read book Three Essays in Empirical Corporate Finance written by and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Corporate Finance by : Hongchao Zeng
Download or read book Three Essays in Corporate Finance written by Hongchao Zeng and published by . This book was released on 2012 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three essays in corporate finance. In the first essay, using the presence of business combination (BC) laws to proxy for the monitoring strength of the takeover market, we examine how an active takeover market affects the level and valuation of corporate cash holdings. After accounting for potential endogeneity of state incorporation, we find that firms incorporated in states without BC laws hold significantly more cash than those incorporated in states with BC laws. We also find that the value of cash holdings used by firms to defend themselves against unwanted takeovers in the presence of an active takeover market is not discounted by investors. Our findings suggest a substitution effect between legal antitakeover protection and firms' use of cash protection. However, there is no evidence that these cash holdings lead to value destruction. Firms may use corporate payouts to signal internal governance quality and avoid a market discount placed on cash holdings. In the second essay, using the Herfindahl-Hirschman Index (HHI), the industry price-cost margin, the number of firms within an industry, and the level of import penetration to gauge the intensity of product market competition, we find that the speed of capital structure adjustment for firms in competitive industries is significantly faster than for firms in non-competitive industries. Further analysis reveals that this effect is driven solely by the capital structure movements of over-levered firms. While over-levered firms in competitive industries face higher levels of investment needs relative to those in non-competitive industries, they are significantly less likely to use debt financing and to deliberately deviate from target. In the third essay, we find that cash has a negative impact on the future market share growth of the old firms, evidence that can better explain the unwillingness of such firms to hold precautionary cash as they face increasingly more volatile cash flows in an imperfect capital market. Furthermore, we show that the relational strength between cash and product market performance evolves in a way that reflects a changing composition of manufacturing firms which progressively tilts toward young firms.
Book Synopsis Three essays in financial economics by : Thomas H. Noe
Download or read book Three essays in financial economics written by Thomas H. Noe and published by . This book was released on 1987 with total page 370 pages. Available in PDF, EPUB and Kindle. Book excerpt:
