Download or read book Essays in Corporate Diversification Information and Incentives written by Shlomith Dinah Zuta and published by . This book was released on 1998 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays In Corporate Diversification Information And Incentives to 25 Pages 26 to 50 Pages 51 to 75 Pages 76 to 100 Pages 101 to 125 Pages 126 to 150 Pages 151 to 164 written by Shlomith Dinah Zuta and published by . This book was released on 1999 with total page 164 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Corporate Diversification written by Xinlin Zhu and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Corporate Diversification Market Efficiency and Allocation of Scarce Resources written by Richard Borghesi and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACT: This dissertation is composed of three essays that address corporate diversification, market efficiency, and allocation of scarce financial resources. The analysis in chapter 2 examines the relationship between changes in firm organizational structure and fluctuations in market value. Organizational structure in this context is defined as the level of corporate diversification, and is measured as the dispersion of total firm sales among existing business segments. The speed and accuracy of the equities market's reaction to events such as corporate reorganization are tested in chapter 3. Finally, in chapter 4, we supplement our organizational structure analysis by examining managerial decision-making in an environment where resources are artificially bounded.

Download or read book Essays on Corporate Diversification written by Dmitry Livdan and published by . This book was released on 2003 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays in Corporate Diversification written by Ja Young Suh and published by . This book was released on 2012 with total page 572 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Firm Diversification written by Xuejing Xing and published by . This book was released on 2003 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation focuses on firm diversification. In particular, this dissertation investigates the valuation effects and the risk effects of corporate diversification. The dissertation consists of two essays. Essay 1, "The diversification discount and growth opportunities: Another look at the effect of corporate diversification on firm value," investigates whether corporate diversification reduces firm value. Previous studies establish a diversification discount by comparing business segments of diversified firms with stand-alone industry medians (means). However, business segments in diversified firms and the median (mean) stand-alone firms in the same industry may not be comparable because they may have different growth opportunities, which usually constitute a significant portion of firm value. Consequently, the observed diversification discount may result from the inappropriate use of benchmarks. In this essay, we use individual stand-alone industry firms of similar growth opportunities as benchmarks for business segments in diversified firms. Using a sample of 218 diversifying firms covering the period of 1994-2000, we find that when business segments in diversifying firms are compared with their stand-alone industry counterparts of comparable growth opportunities, the diversification discount still exists. We thus provide evidence suggesting that corporate diversification does destroy firm value, which is consistent with Lang and Stulz (1994), Berger and Ofek (1995, 1999), and Lamont and Polk (2002). Essay 2, "Does corporate diversification reduce firm risk? An empirical analysis," investigates whether corporate diversification reduces firm risk. While it has been argued and generally assumed that corporate diversification reduces firm risk, there is a paucity of empirical evidence concerning the association between corporate diversification and lower firm risk. Given the observed puzzles associated with corporate diversification, one should not take this association for granted without empirical evidence. In this essay, we empirically investigate the relationship between corporate diversification and firm risk using various risk measures including the variance of stock returns, systematic risk and firm-specific risk measures based both on the traditional single-factor market model and the Fama and French (1993) three-factor model, and time-varying risk estimates based on generalized autoregressive conditional heteroscedasticity (GARCH) estimations. Using a sample of 257 diversifying firms defined as firms that start with a single segment and then diversify at some point of time during the sample period of 1994-2000, we find that rather than reducing firm risk, corporate diversification typically increases the levels of firm risk, thereby rejecting the risk reduction hypothesis of firm diversification.

Download or read book Essays on Corporate Diversification and Firm Value written by Tyson Brighton Mackey and published by . This book was released on 2006 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This dissertation finds new evidence on the relationship between diversification and firm performance. In Chapter Two, theory and evidence are presented showing how empirical studies accounting for the endogeneity of the diversification decision must also account for a firm's alternative uses for its free cash flow. This chapter examines dividends and stock repurchases in tandem with the firm's diversification decision and finds that the factors that lead a firm to diversify also make it more likely to pay a dividend. Controlling for this relationship, the diversification premium found by recent research correcting for endogeneity turns back into a discount. In Chapter Three, consideration is given to the possibility that different firms can have differing results from diversification. Using a random parameters model, a distribution of firm-specific diversification effects is estimated, finding that, while diversification destroys value on average, it creates value for a quarter of firms. This chapter also hypothesizes that firms may have an optimal portfolio of businesses, and firms that are not creating value from diversification could potentially do so through by diversifying further. Through a series of hypothetical related and unrelated diversification scenarios, this chapter finds that almost half of the diversified firms who are not creating value through their past diversification efforts would create value from further related diversification; while very few of the firms that are currently creating value from diversification would create value from further diversification. After observing the heterogeneity across firms in the impact of diversification on firm performance, theory and evidence is presented on the source of this heterogeneity in Chapter Four. Using a Bayesian linear hierarchical model, firm-specific effects of diversification on firm performance are estimated as a function of firm attributes. The main finding is that the firm-specific resources that allow a firm to succeed in its original business, allow the firm to succeed through related diversification. Unsuccessful firms will not find success simply by finding a new market in which to compete.

Download or read book Essays in Corporate Finance written by Amit Seru and published by . This book was released on 2007 with total page 138 pages. Available in PDF, EPUB and Kindle. Book excerpt: A firm's value consists of the value of its assets in place and the value of its growth options. In my dissertation I focus on understanding how a firm's internal organization and its capital structure interact with its growth options - and hence its value. I hypothesize that firms that want to generate value through innovation would prefer an organizational design and a capital structure that allow for more discretion to managers on long term projects. In accordance with this I show that the conglomerate organizational form has a negative impact on the novelty of corporate R&D activity. The drop in R&D productivity is costly for the firm since it results in a lower market value. Moreover, I present evidence that lack of commitment, weak incentives and asymmetric information are responsible for the impact diversified organizational form has on R&D productivity. I also show that arms length financing (such as public debt and equity) is preferred by more innovative firms, whereas less innovative firms tend to use relationship-based borrowing (such as bank borrowing).

Download or read book Three Essays on International Corporate Diversification and Mergers and Acquisitions written by Yee Jin Jang and published by . This book was released on 2013 with total page 209 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: In this dissertation, I explore how the organizational structure of firms impacts corporate financing and investment decisions. I focus on the geographic structure of firms across countries in the first and second essays and changes in boundaries of firms through acquisitions in the third essay.

Download or read book Essays on Empirical Corporate Finance written by Li Zhang and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Corporate Finance written by Kangzhen Xie and published by . This book was released on 2010 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the effects of information asymmetry, financial constraints and stock market valuation on the behavior of firms. The first essay explores the role of deal initiation and bidder asymmetry in determining the use of auction and target premia in merges and acquisitions. The second essay examines the behavior of the segments of conglomerates and single segment firms in the distressed industries. The third essay investigates the incentive of takeover arising from the temporary disparity of stock valuation. While half of all acquisition targets are sold in negotiated deals with only one buyer rather than by auction, the wealth effects for target shareholders are surprisingly similar in both auctions and negotiations. This begs the following questions: why do companies frequently avoid auctions and instead negotiate with just one buyer, and how can targets achieve comparable premia in negotiations? Drawing on Fishman's (1988) model of preemptive bidding and Povel and Singh's (2006) model of asymmetric bidders, I hypothesize that the sales procedure (i.e., auction or negotiation) is most likely determined by the party that initiates the deal. When an acquirer initiates a deal, it prefers a negotiated deal and hence agrees to pay a high premium to preempt the target and other potential bidders from running an auction. I document detailed information on the private bargaining process for 598 deals. I find that most negotiation deals are in fact initiated by the acquirers and that most of the target-initiated deals use an auction, which indicates that targets are using an auction as a mechanism to discover the highest bidder. Moreover, I provide evidence that the targets receive higher excess returns in the deals initiated by the acquirers than in the deals initiated by the targets. I also provide further evidence of preemptive bidding and bidder asymmetry by studying the indicative bids and the business relations between the targets and the acquirers. Hence, target firms are willing to forgo the potential benefits of an auction and agree to a negotiated deal because they are already facing a bidder with a high valuation and are able to get a high price. The second essay uses economic distress in an industry as a natural experiment and tests the alternate theories of conglomeration. We find that segments of conglomerates in distressed industries experience better performance than single segment firms. The distressed segments have higher sales growth, higher R & D expenditure and greater cash flows than single segment firms. Indicating greater financial constraints for single segment firms, the superior performance of segments of conglomerates is confined to the sub-sample of firms without credit ratings and for firms in competitive industries. Single-segment firms reduce their investment in non-cash current assets and significantly increase their cash holdings during periods of industry distress. There is some evidence that the single segment firms that accumulate cash also reduce their R & D expenditure. The diversification discount almost disappears in the years when one of the conglomerate segments is in distress. Overall, our evidence highlights the benefits of conglomerates in enabling segments to avoid financial constraints during periods of industry distress. The third essay studies the effect of valuation difference on merger incentives. There is widespread evidence that bidders are more highly valued than their targets, and that both parties tend to be in temporarily high-valued industries. We find that valuation differences are also extremely important in predicting who will be acquired and when. Our evidence also suggests that the driving force is more a desire to increase earnings per share the (the "bootstrap game" in the classic text of Brealey and Myers) than to exploit market mis-valuation. We find that a firm is more likely to be a target when others in the industry could acquire them in a stock-swap merger that appears accretive to the buyer while paying the target a substantial premium. The resulting measure is similar to the dispersion of valuation multiples within an industry, but is grounded in a specific model of managerial behavior and is empirically much stronger than dispersion. Indeed, it is stronger than any measure in the existing literature, including recent industry merger activity.

Download or read book Two Essays on Corporate Activities and the Market for Corporate Control written by Zheng Liu and published by . This book was released on 2017-01-26 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "Two Essays on Corporate Activities and the Market for Corporate Control" by Zheng, Liu, 刘峥, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This dissertation addresses concerns regarding corporate activities in relation to agency costs and studies the effect of the market for corporate control. In the first essay, we use the mid-1990s Delaware takeover regime shift as an exogenous shock to examine how the removal of takeover threats affects managerial decisions on corporate financing and investment and how it affects firm value. Based on a differences-in-differences-in-differences (DDD) approach, we find that managers reduce debt financing and increase capital investment when they are protected against hostile takeovers, which is consistent with managerial agency models of capital structure and the free cash flow hypothesis proposed by Jensen (1986). We demonstrate that engaging in these entrenched behaviors consequently destroys firm value. Moreover, our evidence indicates that the effect of the takeover regime shift is more pronounced in firms with fewer institutional holdings or lower managerial ownership, supporting the argument of Jensen (1993) that effective internal control systems can alleviate the negative outcomes of a weakened market for corporate control. The substitution effect of internal controls is more substantial than that of the external product market competition. Finally, we determine that empire building, rather than quiet life, is the main consequence of a weakened market for corporate control. In the second essay, we directly examine the causal relationship between managerial entrenchment and diversification. We demonstrate that more entrenched managers adopt higher levels of diversification than do less entrenched managers. We verify the result by using two-stage least squares (2SLS) regression and treating entrenchment as endogenous. In addition, based on an exogenous change in takeover legislation in Delaware in the mid-1990s, we adopt the differences-in-differences-in-differences (DDD) approach and demonstrate that managers increase diversification activities when they are protected against hostile takeovers. Given that diversification destroys value, these results are consistent with the agency costs explanation of diversification. We then explore the motivations that drive managers to diversify. We document that entrenched managers diversify to gain private benefits and to reduce firm risk. Finally, we demonstrate that CEO equity-based incentives increase when takeover-protected firms diversify, suggesting that firms proactively respond to counterbalance the increased costs associated with discretional diversification, which is consistent with theories of optimal contract. DOI: 10.5353/th_b5153698 Subjects: Capital investments Corporate governance Corporations - Finance

Download or read book Three Essays on Market Efficiency and Corporate Diversification written by Fawzi J. Hyder and published by . This book was released on 2017 with total page 175 pages. Available in PDF, EPUB and Kindle. Book excerpt: In my first essay, I use additions to the S&P 500 index as a laboratory to investigate how the interaction between arbitrageurs and arbitrage risk affects security prices. I find that the price effect is strong when there is high arbitrage risk (as measured by the lack of close substitutes) and low presence of arbitrageurs (as measured by low ownership by active institutions). Furthermore, a strong presence of arbitrageurs moderates the effect of arbitrage risk on the post-addition price reaction of added stocks. I also find a significant decrease in arbitrageurs' ownership in the added stocks post addition. More importantly, this decrease is accompanied by a significant increase in arbitrageurs' ownership in the added stocks' close substitutes.

Download or read book Two Essays on Corporate Decisions Liquidity and Investment Efficiencies written by Xiaoyun Yu and published by . This book was released on 2001 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Information and Incentives written by Jürgen Bierbaum and published by . This book was released on 2003 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Employee Stock Options and Executive Compensation in non Diversified Companies written by Pavlo Tsebro and published by . This book was released on 2013 with total page 125 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay I. Prior literature suggests three explanations for why companies are granting stock options as a form of compensation to non-executive employees. Broad-based option grants can be used as an incentives tool, a sorting mechanism, and a means of assisting with employee retention. An alternative explanation also exists, namely, that financially constrained firms use broad-based option grants as a form of self-financing. This dissertation contributes to existing literature by examining the financial-constraints hypothesis in firms' option-granting practices. It is the first study to combine two independent approaches in testing the financial-constraints hypothesis in firm-wide option grants. Using simulated and empirical returns in utility model for a representative individual employee, I investigate whether option-based substitutions for a portion of payment in cash can result in economic savings to firms. Secondly, using empirical data on broad-based option grants and utilizing a financial constraints index and individual variable proxies for constraints, I examine the relationship between option grants and the severity of financial constraints to which the firm is subject. I find that direct financial benefits to the firm from the use of option grants are, in general, possible. However, sorting is more likely primary reason for using broad-based option grants, while self-financing is a positive side effect of sorting. Essay II. Agency problems are generally viewed in the literature as one of the reasons why the diversification discount exists. The adoption of equity-based forms of pay (EBC) in CEOs' compensation is considered one way of mitigating agency problems and thus enhancing the value of the firm. Essay II investigates how the intensity of EBC impacts the valuation of diversified firms in two dimensions of diversification: industrial and geographic. Building on the prior literature, this study takes a multi-dimensional approach by considering the combined effects of EBC levels, degrees of product, and geographic diversification on the valuation of the firm. Based on the results of this study I conclude that a firm's valuation is negatively affected by geographic diversification, but it is positively related to industrial diversification, while firms pursuing dual diversification strategies are valued at a discount. Use of the EBC helps to mitigate agency problems and has a positive effect on the firm's valuation. Finally, as a secondary objective I investigate whether regulatory changes (adoption of the SFAS No. 131, FASB 1997) affect the nature of the reported segment data. I find that new regulations do not materially alter the nature of the reported segment data, at least for the purposes of this study.