Essays On Corporate Investment And Managerial Attribution
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Essays On Corporate Investment And Managerial Attribution
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Author : Wahib Ghazni
language : en
Publisher:
Release Date : 2023
Essays On Corporate Investment And Managerial Attribution written by Wahib Ghazni and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with Corporations categories.
The dissertation empirically investigates the role of managerial traits, skill, and biases on corporate investment decisions. The first essay causally explores the impact of Diversity Inclusion and Equity (DEI) in the ranks of executive leadership on corporate intangible capital. Using a machine learning algorithm that is trained on the U.S Census to build a novel database that identifies the ethnicity of all C-Suite Executives. It explores the differentiating dimensions of leadership traits that are brought to the managerial decision-making process by DEI. The findings reveal that minority executives pioneer in building a firm's intangible capital by increasing its innovation output and growing its organizational capital. The second essay shows that the sharp decline in option compensation following SFAS 123R in 2005 has diminished the effectiveness of previous option-based managerial overconfidence measures. Thus, it proposes a new measure of managerial overconfidence: dollars at risk from voluntarily holding vested shares and options. It tests 16 predictions from the literature regarding overconfidence and finds strong evidence validating the proposed measure. The third and last essay lends empirical support to the premise that boards consider dynamic CEO performance to make their estimates about true CEO skill. It expands the focus of the relative performance evaluation from studying the relationship of CEO pay and turnover with contemporaneous skill performance to including persistent skill. Its findings show that boards do consider dynamic skill performance in their assessment of managerial skill and that persistent skill is associated with higher pay and a lower probability of turnover.
Two Essays On Corporate Activities And The Market For Corporate Control
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Author : Zheng Liu
language : en
Publisher:
Release Date : 2017-01-26
Two Essays On Corporate Activities And The Market For Corporate Control written by Zheng Liu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-26 with categories.
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
Three Essays On Information Production And Monitoring Role Of Institutional Investors
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Author : Xiaorong Ma
language : en
Publisher:
Release Date : 2017-01-26
Three Essays On Information Production And Monitoring Role Of Institutional Investors written by Xiaorong Ma and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-26 with categories.
This dissertation, "Three Essays on Information Production and Monitoring Role of Institutional Investors" by Xiaorong, Ma, 马笑蓉, 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 thesis includes one essay about the information production of institutional investors and two essays about the monitoring role of institutional investors. The first essay empirically examines the association between investor base and information production in the context of stock splits. Using the proportion of 13F filers as the proxy for the size of investor base, we show that three proxies for stock price informativeness, adjusted probability of information-based trading (AdjPIN), price non-synchronicity and probability of information-based trading (PIN), decrease significantly due to enlarged investor base after stock splits. It suggests that institutional investors are less incentivized to gather firm specific information when firm''s investor base expands, which is consistent with the "risk sharing hypothesis," proposed by Peress (2010). Furthermore, we find that the change of the price informativeness around splits is negatively related to the magnitude of positive return drifts following splits. This result is consistent with the notion that less information incorporated in stock prices results in a sluggish response by the market to corporate event. The second essay empirically identifies an external corporate governance mechanism through which the institutional trading improves firm value and disciplines managers from conducting value-destroying behaviors. We propose a reward-punishment intensity (RPI) measure based on institutional investors'' absolute position changes, and find it is positively associated with firm''s subsequent Tobin''s Q. Importantly, we find that firms with higher RPI exhibit less subsequent empire building and earnings management. It suggests that the improved firm values can be attributed to the discipline effect of institutional trading on managers, which is in line with the argument of "Governance Through Trading." Furthermore, we find that the exogenous liquidity shock of decimalization augments the governance effect of institutional trading. We also find that the discipline effect is more pronounced for firms with lower institutional ownership concentration, higher stock liquidity, and higher managers'' wealth-performance sensitivity, which further supports the notion that institutional trading could exert discipline on a manager. The third essay focuses on a particular type of institutional investor, short sellers, and explores the discipline effect of short selling on managerial empire building. Employing short-selling data from 2002-2012, we find a significantly negative association between the lending supply in the short-selling market and the subsequent abnormal capital investment. Besides, we find a positively significant association between the lending supply and the mergers and acquisitions announcement returns of acquiring firms. These results suggest that the short-selling potential could deter managers from conducting over-investment and value-destroying acquisitions. In addition, the discipline effect is stronger for firms with higher managers'' wealth-performance-sensitivity, for firms with lower financial constraints, and for stock-financed acquisition deals. Finally, firms with higher lending supply also have higher Tobin''s Q in the subsequent year. These results indicate that short-selling is another important external governance force. DOI: 10.5353/th_b5066226 Subjects: Institutional i
Essays On The Investment Effect
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Author : Yao Yao
language : en
Publisher:
Release Date : 2017-01-26
Essays On The Investment Effect written by Yao Yao and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-26 with categories.
This dissertation, "Essays on the Investment Effect" by Yao, Yao, 姚瑶, 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: The thesis consists of two essays on the investment effect. The first essay is an international examination of the investment effect, and the second essay explores the rationale behind the investment effect based on U.S. data. A growing body of finance literature has documented an investment effect that firms making larger investments earn lower future stock returns. While the negative relation between corporate investments and future stock returns is well accepted, it is in a great debate for why an investment effect exists. Two major hypotheses are proposed to account for the investment effect, mispricing and rational pricing. The mispricing hypothesis focuses on market participants' irrational behavior, including managerial overinvestment and investors' extrapolation of past firm performance. The rational pricing hypothesis, however, centers on examinations of the q theory. Under the q theory, the net present value of potential projects can be high if either the future marginal productivity is high or the future discount rate is low. As a result, for a given level of future profitability, firms making large (small) investments are likely to be those with low (high) discount rates. This predicts low (high) stock returns following large (small) capital investments. The first essay tests the q theory explanation for the investment effect using international data. I show that the investment effect exists across international markets and differs substantially across countries. I find a stronger investment effect in countries with better corporate governance, lower limits to arbitrage, and more developed equity markets. I construct a composite Q index, based on corporate governance, limits to arbitrage and market development, to separate countries with a strong investment effect from the rest. The empirical results are consistent with the q theory explanation for the investment effect. The second essay investigates the relation between the investment effect and intangible returns, as well as external financing, in the U.S. market. Extending the model in Daniel and Titman (2006), I operationalize an empirical design of log-linear decomposition of the book-to-market ratio. Using a three-period empirical model, I examine the relations among intangible returns in period one, real investments and external financing in period two, and stock returns in period three. The empirical evidence suggests no additional explaining power of investments for future stock returns, when contemporaneous external financing and prior intangible returns are controlled for. The abnormal return patterns associated with real investments documented in prior studies are consistent with, and part of, the broader return pattern that characterizes the value/growth anomaly. I show that these findings are consistent with the q theory, but inconsistent with the mispricing story. DOI: 10.5353/th_b5043432 Subjects: Investments
Two Essays On Investor Overconfidence And Asset Prices
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Author : Biljana Nikolic
language : en
Publisher:
Release Date : 2012
Two Essays On Investor Overconfidence And Asset Prices written by Biljana Nikolic and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with Electronic Dissertations categories.
This dissertation contains two essays about the impact of investor overconfidence on asset prices. The first essay examines the role of investor overconfidence in explaining the momentum effect. Using a comprehensive sample of U.S. equity mutual funds, I develop two new measures of investor overconfidence based on the characteristics and trading patterns of the fund managers. I find that stocks held by more overconfident managers experience greater momentum profits and stronger return reversals than stocks held by less overconfident managers. The difference in momentum profits between stocks held by more- and less-overconfident managers is not a compensation for risk, nor is it attributable to stock characteristics that influence momentum. My results provide direct support for the argument that stock return momentum is caused by investor overconfidence and biased self-attribution. In the second essay I investigate the impact of investor overconfidence on firm value and cost of capital. Consistent with theoretical predictions, I show that firms held by more overconfident investors exhibit significantly higher market-to-book ratios and significantly lower implied cost of capital. Firms with more overconfident investors experience lower subsequent stock returns, consistent with prices slowly moving back to fundamental values. Moreover, I find that firms with more overconfident investors issue more equity and make more investments, consistent with corporate managers exploiting market misvaluation in making financing and investment decisions.
Two Essays On Corporate Investment Behavior
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Author : Haibin Brett Jiu
language : en
Publisher:
Release Date : 2001
Two Essays On Corporate Investment Behavior written by Haibin Brett Jiu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with categories.
Essays On Corporate Investment Behavior And Specific Governance And Strategy Related Determinants
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Author : Patrick Jaslowitzer
language : en
Publisher:
Release Date : 2016
Essays On Corporate Investment Behavior And Specific Governance And Strategy Related Determinants written by Patrick Jaslowitzer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Corporate Investment Behavior With Incomplete Information
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Author : Martin Ruckes
language : en
Publisher:
Release Date : 1998
Corporate Investment Behavior With Incomplete Information written by Martin Ruckes and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with categories.
Manager Selection
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Author : Scott Stewart
language : en
Publisher:
Release Date : 2015
Manager Selection written by Scott Stewart and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Manager selection is a critical step in implementing any investment program. Investors hire portfolio managers to act as their agents, and portfolio managers are then expected to perform to the best of their abilities and in the investors' best interests. Investors must practice due diligence when selecting portfolio managers. They need to not only identify skillful managers, but also determine the appropriate weights to assign to those managers. This book is designed to help investors improve their ability to select managers. Achieving this goal includes reviewing techniques for hiring active, indexed, and alternative managers; highlighting strategies for setting portfolio manager weights and monitoring current managers; and considering the value of quantitative and qualitative methods for successful manager selection.
Attribution In International Law And Arbitration
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Author : Carlo de Stefano
language : en
Publisher: Oxford University Press
Release Date : 2020-01-09
Attribution In International Law And Arbitration written by Carlo de Stefano and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-01-09 with Law categories.
Attribution in International Law and Arbitration clarifies and critically discusses the international rules of attribution of conduct, particularly regarding their application to states under international investment law. It examines the key question of how and to what extent breaches of State obligations, particularly in respect of States' commitments to foreign investors under international investment agreements (IIAs) and bilateral investment treaties (BITs), can be attributed. Of special interest within this context is the responsibility of States when the alleged breach has been committed by separate legal entities, rather than the state itself. Under domestic law, entities such as state-owned enterprises (SOEs) are considered legally distinct, however the State may still be considered responsible for their actions under international law. The book addresses the relevant issues systematically, beginning with direct reference to the Draft Articles on Responsibility of States for Internationally Wrongful Acts (ARSIWA) on attribution, finalized by the International law Commission (ILC) in 2001. It then elaborates on the specifics of international investment law, based on a detailed examination of practice and case law, whilst giving due consideration to the academic debate. The result is a full, innovative take on one of the most difficult questions in investment arbitration.