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. " --

Download or read book Two Essays in Financial Institutions and Corporate Finance written by Xinting Zhen and published by . This book was released on 2018 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays in Corporate Finance and Financial Institutions written by and published by . This book was released on 2014 with total page 394 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis conducts empirical studies related to financial institutions and corporate finance. Specifically, I look at banks' lending behavior, performance of leveraged buyouts (LBOs), and the cultural impact on cross-border LBOs. Following an introduction in Chapter 1, in Chapter 2, I study U.S. commercial banks' herding behavior in their domestic loan decisions, where herding is defined as the extent to which banks deviate from the industry average lending decisions and collectively increase or decrease loans to certain categories. I find significant evidence that herding exists and that banks tend to herd more when the economic condition is less favorable, regulation is tight, and when banks are struggling . Overall, these findings support the hypotheses of information asymmetry and regulatory arbitrage as motivations for herding. Chapter 3 provides a comprehensive study of LBO deal characteristics, participants' involvement, and their impact on target firms' performance. I find that better post-buyout operating performance is associated with larger amounts of leverage added during the LBO process, tighter LBO loan covenants, and equity contribution by target firms' incumbent management. LBOs are more likely to exit through an IPO or a sale if they use more bank debt with tighter covenants and are sponsored by private equity (PE) firms of high reputation. These results suggest that the main source of value creation in LBOs is the reduced agency costs through the disciplining effect of debt, closer monitoring by lenders, and the better aligned management incentives. PE reputation is also important in ensuring successful deal outcomes. Chapter 4 (co-authored) examines the impact of cultural differences between PE firms and target firms on the completion of cross-border LBOs. We find that cultural distance between PE and target firms reduces the likelihood of buyout completion and increases the time between buyout announcement and completion. We also find that club deals moderate the negative (positive) impact of cultural distance on the likelihood (the duration) of LBO completion. This mitigation effect is through the increased familiarity channel of club formation. Our findings contribute to the literature that underscores the importance of culture in economic outcomes.

Download or read book Essays in Corporate Finance and Financial Institutions written by Adam Kolasinski and published by . This book was released on 2006 with total page 123 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chi: Subsidiary Debt, Capital Structure, and Internal Capital Markets I investigate external subsidiary debt financing and its implications for internal capital markets. I find that firms tend to finance business segments with subsidiary debt when those segments have better investment opportunities than the rest of the firm, and such debt tends to be parent-guaranteed. I also find that having such debt outstanding significantly reduces the effect of a segment's cash flow on the capital expenditures of other segments. These findings suggest that firms use subsidiary debt to protect their stronger segments from the underfunding or "poaching" problems modeled in theories of internal capital markets. In addition, I find that firms use subsidiary debt for reasons related to traditional capital structure concerns. Ch2: Is the Chinese Wall too High? I test whether new regulatory restrictions on cooperation between analysts and investment bankers adversely affect equity research coverage. Contrary to the hypothesis, I find that firms engaging in SEO's enjoy just as large an increase in analyst coverage in the post-regulatory period as they do in the pre-regulatory period.

Download or read book Summary of the Thesis Essays on Financial Stability and Corporate Finance written by Mónica López-Puertas Lamy and published by Ed. Universidad de Cantabria. This book was released on 2014-01-20 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: El principal objetivo de este trabajo consiste en analizar los efectos que la estructura de propiedad bancaria tiene sobre la toma de riesgos, a nivel microeconómico y sobre el riesgo sistémico, a nivel macroeconómico. Para ello se desarrolla un modelo de competencia oligopolística y se analizan las propiedades del equilibrio de mercado en términos de beneficios, cuota de mercado y micro y macro estabilidad financiera cuando un banco comercial, maximizador de beneficios, compite contra un banco no orientado hacia los beneficios (stakeholder bank). Los resultados teóricos son validados empíricamente usando datos bancarios de 72 países durante el periodo 1997-2007. Concretamente se muestra que a) los stakeholder banks son menos arriesgados que los bancos comerciales, b) cualquier banco es más arriesgado cuando compite contra un stakeholder bank en lugar de contra un banco comercial, c) a nivel sistémico la presencia de stakeholder banks aumenta la estabilidad financiera, d) el efecto de la regulación bancaria y de la competencia en la toma de riesgos depende de la estructura de propiedad del banco, e) la concentración accionarial incrementa el riesgo bancario, f) el diseño de los incentivos gerenciales tiene un efecto muy significativo sobre la toma de riesgos bancarios.

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.

Download or read book Essays in Corporate Finance written by Vladimir Mukharlyamov and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the third chapter, using a novel dataset that allows me to capture the education and career trajectories of over 250,000 employees of 224 bank holding companies, I find that banks with shorter employee tenures and higher fractions of MBAs, top school graduates, and job jumpers performed more poorly during the Great Recession. This relationship is driven by the predisposition of these banks to take on greater risk. These same workforce measures also explain banks' performance in the 1998 crisis. Taken together, my results suggest that investigating workforce measures could be a step towards quantifying components of risk culture or strategy that contribute to financial institutions' vulnerability to crisis.

Download or read book Essays in Corporate Finance and Banking written by Thao Minh Vuong and published by . This book was released on 2019 with total page 174 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines the disciplining role of different types of investors and stakeholders of a firm and how that affects the firm's behaviors and characteristics. The first chapter studies the interaction of equity investors and debtholders in monitoring the firm and its effects on the efficiency of the firm's stock price. The second chapter studies how capital buffer requirements should be set by financial regulators in response to risk-shifting incentives by financial institutions. The third chapter first shows that the effect of a single large shock on a networked financial system might be different from that of a sequence of smaller shocks with the same cumulative magnitude and then analyzes optimal government intervention.

Download or read book One Essay On Market Microstructure And Two Essays On Corporate Finance And Financial Institutions written by Jianning Huang and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation research comprises one essay on market microstructure and two essays on corporate finance and financial institutions. In the first essay, I examine the effects of a speed bump on market quality and exchange competition. After a long period of facilitating faster trading, exchanges are now trying to slow down trading with speed bumps. I study how this market-design innovation affects traders reaction times, the market quality of stocks, and the operators of competing exchanges. Post speed bump, I find slower reaction times to order book events and reduced order detection and back-running. Reduction in quote-to-trade ratio and flickering quotes improves market quality. Exchanges without planned speed bumps lose market share, with reduced return on their share price, enterprise value, and investment in high-speed assets. Their stocks become attractive for short sellers. In the second essay, I investigate the governance role of banks by examining lenders monitoring effect on borrowers tax planning. I posit that lenders monitoring has an impact on borrowers tax planning on the two ends of the continuum of tax planning strategies. I show that firms with a larger portion of loan shares held by lead lenders, with loans led by reputable lenders and with a single-lending relationship have lower effective tax rates and less egregious tax aggressiveness. I also document that borrowers with loan sales that weaken lenders monitoring incentives tend to have higher effective tax rates and more egregious tax aggressiveness. Moreover, our results on tax aggressiveness are stronger for firms with more intense shareholder-debtholder conflict. In the third essay, I use the China setting to study the determinants and impact of equity pledges by large shareholders. I find that the likelihood of equity pledges increases with recent stock returns and firm financial constraints. The market reacts positively to equity pledge announcements, especially when the lender is a securities firm. Moreover, firms whose shares are pledged subsequently improve operating performance and manage earnings less. Collectively, our results are consistent with equity pledges being used as a commitment device by large shareholders not to expropriate from minority shareholders and ultimately benefits outside shareholders..

Download or read book History of Financial Institutions written by Carmen Hofmann and published by Routledge. This book was released on 2016-10-04 with total page 424 pages. Available in PDF, EPUB and Kindle. Book excerpt: Globalization is not an external force but a result of concrete business decisions made by millions of entrepreneurs and managers across the world. As such, the modern corporation has completely altered the economic landscape; business and finance have shaped the international order of the modern world. History of Financial Institutions contributes to the analysis of how the modern corporation, business and finance have shaped and keep on shaping our world. In a collection of nine succinct essays, this volume looks at the role of finance in European history from the beginning of the 19th century to the period after the Second World War. Archivists and financial historians, who are also leading scholars of banking and financial history, investigate the ways in which the international post-war order developed. They draw on often hitherto unused archival sources from central banks and other institutions to reveal the unique histories of a variety of European countries and the paths that have led to the contemporary economic and financial system. The collection includes reflections on (monetary) stabilization, inflation, hyperinflation, globalization and public relations in banking and commerce. This book is essential reading for banking and finance executives, as well as policy makers with a historical interest. It will also be of importance to academics with a particular interest in economic history, financial or banking history, and European history.

Download or read book Essays on Corporate Finance and Banking written by John Lynch (Ph. D. in finance) and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three chapters on topics related to corporate finance and banking. The first two chapters explore how fiscal policy and bank branching deregulation can impact firms’ liquidity and credit constraints, while the third chapter looks at the relationships between executive status, compensation, masculinity, and language complexity. In the first chapter, I shed light on the complexity of liquidity injection programs by providing evidence on unintended consequences that arise when governments and central banks do not consider firm heterogeneity. Utilizing hand-collected, firm-level data from the Paycheck Protection Program, I show that government lending effectively reduced closures (the ultimate consequence of a liquidity shortfall), especially when received during the first two weeks of the program. However, I find that there was significant heterogeneity in the effectiveness of funds, resulting from the government’s broad-brush eligibility guidelines and differences in how firms process policy information. The implementation heavily relied on the banking system, which exacerbated the distributional effects by favoring firms with stronger customer capital. Overall, this chapter highlights the importance of the design of liquidity distribution to maximize its benefits. In the second chapter, I quantify the extent to which financial constraints limit the scope of activity of small firms, influence their labor decisions, and impact their ultimate survival. To study this, I first document how markets with bank branching deregulation experienced an increase in branches, driven by the entry of larger out-of-state banks with a decrease in existing branches. Consequently, small businesses were affected disproportionally. In the treated markets, the overall lending to small businesses declined by 5.4% and remained lower for several years. The decline in credit supply led to a decrease in the number of small businesses; however, many firms were able to stay open by decreasing their demand for labor. Specifically, I document decreases in employment, hours worked, and wages in treated markets. Overall, the results demonstrate the critical dependence of small businesses on relationship lending by local banks and show how temporary negative credit supply shocks can have persistent adverse effects on labor. In the third chapter, I use novel measures of CEO and CFO vocal masculinity and language complexity to gain insight into how these individual-level traits influence executive status and compensation both within and across genders. I find that vocal masculinity, within females, positively impacts their likelihood of becoming a CEO while the opposite is true for males. Furthermore, I find heterogeneity in these relationships depending on the gender composition of the board, the gender of the CFO, and the entrenchment level of a firm. When it comes to communication, CEOs speak with greater complexity than CFOs while both female CEOs and CFOs use more complex language and speak longer during earnings calls than their male counterparts. Finally, for both male and female CEOs, compensation is positively related to masculinity, while increased language complexity only matters for females. These results help provide insight into the determinants of CEO status and compensation and may help explain how boards view and reward perceived competency across genders.

Download or read book Three Essays on Corporate Finance written by Haiwei Jing and published by . This book was released on 2015 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 1 hypothesizes that some banks specialize in providing monitoring capital, which includes monitoring services in addition to financial capital, and that such specialization leads them to focus their lending on financially weak firms. I test this hypothesis by constructing a variety of novel measures of banks' monitoring skills and find that financially weak firms are more likely to match with banks that have high monitoring skills and that shocks to firms' financial strength cause them to switch to banks that are a better fit to their new monitoring needs. Chapter 2 investigates how the switching cost, as a result of informational frictions, affects firms' migration behavior. I propose a novel mechanism whereby banks can coordinate with other institutions with which they conduct business; when a relationship bank determines that its firm matching is inefficient, under some conditions, it can transfer the firm to the bank's partner. Using the loan spread residual as a proxy for unobservable credit shocks, I find consistent evidence that a firm with a larger magnitude residual has a higher likelihood of going to a bank that is not a relationship bank but rather a syndicate partner of its relationship bank; and when the spread residual is positively large, the bank partner to which the firm switches tends to put a high stake in the syndicate, which is consistent with its monitoring role for a distressed firm. Chapter 3 proposes that alliances are a channel for merger propagation when partnering firms have complementary resources. I confirm the mechanism's main prediction using US data on corporate alliances and merger activity: The likelihood that a firm will be involved in mergers and acquisition (M\&A) increases significantly if its partners have also engaged in M\&A during the previous two years. My empirical result is not explained by industry-wide M\&A activity or company characteristics. I present three additional empirical results: (i) The propagation effect is stronger when I include proxies for the strength of post-partner-merger resource reallocation, which is consistent with the mechanism, (ii) merger propagation effects are not merely localized but rather diffuse through the alliance network, and (iii) partner mergers also lead to a higher likelihood of entering new alliances.

Download or read book The Future of Financial Systems and Services written by Edward P.M. Gardener and published by Springer. This book was released on 2015-12-22 with total page 422 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume of essays comprises a systematic collection of views from scholars and practitioners on the future of financial systems and services and reflects the fact that the financial industry worldwide is involved in a major restructuring process.

Download or read book Essays in Corporate Finance written by Rachel E. Gordon and published by . This book was released on 2015 with total page 314 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of one chapter studying the information possessed by outside directors before mergers and two chapters related to firms and their advisor relationships. The three essays in my dissertation explore various areas of corporate finance. My first paper titled "Are they in the know? Assessing outside director private information in M&A" examines trades by acquirer outside directors to test whether these directors are informed about upcoming mergers and whether they trade on this information for personal gain. Empirical evidence provides strong support of these hypotheses. Opportunistic trading in pre-merger months by outside directors is associated with the likelihood of a merger announcement and these trades appear correlated with deal quality. Outside directors sell shares before less valuable deals and purchase shares before more value-enhancing ones, suggesting that outside directors use their private information in self-serving ways. This relationship appears to be concentrated in harder to value firms and intensifies when a greater number of outside directors on the board trade in the same direction. Furthermore, there is evidence that this behavior occurs in firms with high levels of CEO power signifying that underlying agency problems may exist for some of these firms. The second essay titled "Why hire your rival? The case of bank debt underwriting," with David Becher and Jennifer Juergens, explores the previously undocumented debt underwriting relationship for financial firms. These firms are unique in that they are the only firms both able and capable of underwriting their own securities issuances. We find, however, that publicly traded investment and commercial banks ("banks") hire a rival in nearly 30% of all their debt issuances from 1979-2014. Further, the use of rivals is not limited to small, low ranked, or commercial banks as large, high quality, or investment banks also tend to engage rivals.Traditional (bank expertise and information sharing) as well as bank-specific (capacity constraints and limited distribution networks) motivations help explain why banks hire a rival. Evidence also suggests that the decision to use a rival to underwrite debt offerings affects fees. Collectively, these results expand our understanding of banks' underwriter choice and show that despite the potential costs, banks pervasively hire their rivals. The last essay titled "Are firm-advisor relationships valuable? A long-term perspective," with David Becher and Jennifer Juergens, examines long-term firm-advisor relations using an extended history of debt, equity, and merger transactions. Hard-to-value firms are more likely to maintain dedicated advisor relations (underwriters or merger advisors). Firms that retain predominantly one advisor over their entire transaction history pay higher underwriting/advisory fees, have inferior deal terms, and have lower analyst coverage relative to those that employ many advisors. When we condition on a firm's information environment as a catalyst for longterm advisor retention, riskier firms obtain better terms when they utilize a variety of advisors, but informationally-opaque firms do not. Our results suggest that only some firms benefit from long-term advisor retention.

Download or read book Essays on Corporate Finance and Financial Markets written by Jiaheng Yu and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters. Chapter 1 studies the informational role of trade credit and the accounts receivable financing market. I hand collect new data on the contracts of accounts receivable based loans and trade credit terms. I find that sellers experiencing payment delays are primarily financed through accounts receivable based loans. These loans are 2- 4% per year more expensive than buyers' borrowing rates and require a 20% average haircut on invoice value. Seller moral hazard that leads to bad-quality products is a determinant of payment delays, and although difficult to observe in existing data, can be uncovered from terms of accounts receivable based loans. Lenders help improve the quality of sellers: sellers who successfully receive credit experience a 5% decline in receivable days and have higher sales and longer relationships with buyers. I propose and structurally estimate a trade credit model that incorporates accounts receivable financing. In the model, the buyer trades off the financial cost and the incentive effect of trade credit and learns from the lender's loan decisions. I show through counterfactual analyses that regulatory limits on payment delays increase the presence of bad products and lower output, while subsidizing accounts receivable financing may increase output at relatively low expense. In Chapter 2, joint work with Rodney Garratt and Haoxiang Zhu, we study the design of Central Bank Digital Currencies. Banks of different sizes respond differently to interest on reserves (IOR) policy. For low IOR rates, large banks are non-responsive to IOR rate changes, leading to weak pass-through of IOR rate changes to deposit rates. In these circumstances, a central bank digital currency (CBDC) may be used to provide competitive pressure to drive up deposit rates and improve monetary policy transmission. We explore the implications of two design features: interest rate and convenience value. Increasing the CBDC interest rate past a point where it becomes a binding floor, increases deposit rates but leads to greater inequality of market shares in both deposit and lending markets and can reduce the responsiveness of deposit rates to changes in the IOR rate. In contrast, increasing convenience, from sufficiently high levels, increases deposit rates, causes market shares to converge and can increase the responsiveness of deposit rates to changes in the IOR rate. In Chapter 3, joint work with Jingxiong Hu, we study the effect of "guaranteed close" on the informativeness of market close prices. Passive investment strategies that trade at market close have incurred high transaction fees charged by the primary exchanges. Investment banks undercut the exchanges by executing client orders at close prices set on the exchanges yet charging lower fees. While providing liquidity, banks trade on the order flow information. Using a quasi-experimental shock - an NYSE close auction fee cut - we find that banks' trading activities improve the informativeness of close prices and reduce the cost of passive investment strategies. To explain this finding, we propose a model where dual trading improves price discovery. A bank contributes to price discovery by trading on the informativeness of the orders it receives relative to the market. The implications of our model apply generally to scenarios with multiple trading venues where venue operators trade on order flow data.

Download or read book Essays on Banking and Corporate Finance written by Daniel Paravisini and published by . This book was released on 2005 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first essay provides evidence that banks are liquidity constrained and hold private information about borrowers that hinders substitution of financing sources. Using loan level data from a public credit bureau and exploiting an exogenous shock to bank liquidity, I show that adverse selection prevents full arbitrage of profitable opportunities by competing lenders and thus liquidity constraints propagate to bank-dependent borrowers. The second essay evaluates a government program that targeted credit to small firms through existing financial intermediaries. Using the program eligibility rule to identify the effect on target firms, I find that target firms' total bank debt increased by 8 cents for every dollar of program financing provided to the banks. This effect is larger when the intermediary bank is more likely to lend to smaller firms according to observable bank characteristics. The third essay evaluates empirically the effect of credit history disclosure on the financial position of a sample of manufacturing firms in Argentina. Results indicate that credit history disclosure has a negative impact in the ability of firms to raise external finance when firms are exposed to a high liquidity risk.

Download or read book Essays in Corporate Finance written by Bruno d Laranjeira and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis presents two essays in Corporate Finance. In the first essay, I use the August 2007 crisis episode to gauge the effect of financial contracting on real firm behavior. I identify heterogeneity in financial contracting at the onset of the crisis by exploiting ex-ante variation in long-term debt maturity structure. Using a difference-in-differences matching estimator approach, I find that firms whose long-term debt was largely maturing right after the third quarter of 2007 cut their investment-to-capital ratio by 2.5 percentage points more (on a quarterly basis) than otherwise similar firms whose debt was scheduled to mature after 2008. This drop in investment is statistically and economically significant, representing one-third of pre-crisis investment levels. A number of falsification and placebo tests suggest that my inferences are not confounded with other factors. For example, in the absence of a credit contraction, the maturity composition of long-term debt has no effect on investment. Moreover, long-term debt maturity composition had no impact on investment during the crisis for firms for which long-term debt was not a major source of funding. Our analysis highlights the importance of debt maturity for corporate financial policy. More than showing a general association between credit markets and real activity, my analysis shows how the credit channel operates through a specific feature of financial contracting. In the second essay, I analyze how institutional investors choose which Initial Public Offering to invest. Using a sample of IPOs from 1980 to 2004, I show that the reputation of the lead underwriter is the most significant variable in this decision process. Using Carter-Manaster rankings of underwriter reputation, I report that a one point increase in the reputation ranking leads to a 2% increase in institutional investors` holding. Moreover, I test hypotheses about what kind of certification the underwriter is providing. I provide evidence that underwriters certify un-measurable characteristics, in contrast to measurable characteristics, such as those provided in the financial statements of the issuer.