Essays On Market Conditions And Corporate Investment Decisions
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Essays On Market Conditions And Corporate Investment Decisions
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Author : Ding Ding
language : en
Publisher:
Release Date : 2015
Essays On Market Conditions And Corporate Investment Decisions written by Ding Ding 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.
Essays In Corporate Financing And Investment Decisions
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Author : Hoang Van Vu
language : en
Publisher:
Release Date : 2015
Essays In Corporate Financing And Investment Decisions written by Hoang Van Vu 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.
The evolution of corporate debt markets in recent decades, especially short-term debt facilities and bank debt, has made funding more accessible for corporate borrowers. On the other hand, the changing environment of debt markets also creates new challenges for corporate borrowers. First, as the debt maturity structure has become shorter, companies face higher liquidity pressure. Second, since banks also increasingly rely on short-term wholesale funding, the maturity mismatch of bank assets and liabilities has widened, further increasing economy-wide liquidity risk. These problems were illustrated by the most recent liquidity crisis that lasted from 2007 to 2009. Understanding the implications of borrowing using short-term debt therefore is crucial for the modern corporate finance. Moreover, the issues regarding the maturity mismatch of the banking sector imply that fluctuations in bank credit might increase, as banks become more sensitive to liquidity constraints. This thesis explores a number of issues regarding the use of short-term debt by non-financial companies, as well as the implications of fluctuations in bank credit for corporate financial and investment policies. The thesis contains three empirical research essays, presented individually in Chapters 2, 3 and 4. The first essay investigates the implications of debt maturity structure on corporate investment activities in the presence of firm specific default risk. The second and the third essays examine the implications of bank credit cycles on corporate activities. Essay 2 studies the effect of bank credit cycles on firms' choice of external financing issues, whereas Essay 3 examines the effect of bank credit on corporate liquidity management policies and the spending on different types of investment.
Two Essays On Corporate Decisions Liquidity And Investment Efficiencies
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Author : Xiaoyun Yu
language : en
Publisher:
Release Date : 2001
Two Essays On Corporate Decisions Liquidity And Investment Efficiencies written by Xiaoyun Yu 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.
Corporate Investment Behavior In The Imperfect Capital Market
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Author : Sijing Zong
language : en
Publisher:
Release Date : 2006
Corporate Investment Behavior In The Imperfect Capital Market written by Sijing Zong and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Capital market categories.
My dissertation is a study of corporate investment behavior under market imperfections. This dissertation is structured as three inter-related essays that each addresses a particular aspect of the investment behavior of firms and all share common themes which are 1) market imperfections complicate managerial decisions on investments; and 2) the models based on perfect market assumptions may not be correct. The first essay, The relationship between internal cash flow and investments, studies the puzzle of the sensitivity of corporate investments to internal cash flows and finds that a U-shaped sensitivity curve between investment and cash flows can be clearly identified in the U.S. and in most other countries studied. The second essay, The relationship between market valuation and corporate investments, studies the relationship between stock market valuation and firm investments using a model controlling for many market imperfection components and employing simultaneous equations estimates. Essay two finds that both market perceptions and fundamental factors are important influences on corporate investment decisions. Moreover, we document that market valuation has a much higher impact on investment than fundamental variables, which seems to be consistent with the contentions in Barro (1990) and Baker et al. (2003). The third essay, Who will benefit from diversification: a transaction cost view of diversified firms, studies the issue of diversification and using data for a number of countries finds that both firm-level and country-level variables are important determinants of the excess values of diversified firms. We find that country risk, legal system, country disclosure level, information asymmetry measures, and agency cost measures are all important factors that influence diversified firm values. Our findings are largely consistent with those suggested by the transaction cost theory and provide a new perspective for the evaluations of firm diversification. In summary, this dissertation studies the impacts of market imperfections on corporate investment decisions and suggests that when operating in an imperfect market, a firm's investment decision-making process is influenced by cash flows, stock prices, and transactions costs, and is much more complicated than in perfect markets.
Essays On Corporate Investment Decisions
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Author : Zhikun Li
language : en
Publisher:
Release Date : 2004
Essays On Corporate Investment Decisions written by Zhikun Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Corporations categories.
Two Essays On Investments
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Author : Jie Zhu
language : en
Publisher:
Release Date : 2017
Two Essays On Investments written by Jie Zhu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
In my dissertation, I study factors that influence investments from either corporate or institutional perspective. First, I examine the sensitivity of corporate investment to internally generated cash flow and its pattern of change over time across countries. Second, I investigate how a firm's customer profile can shape its ownership structure of institutional investors. Existing studies have documented a puzzling disappearance of investment-cash flow (ICF) sensitivity in the U.S.. In the first chapter, I explore whether economic and financial development can explain the extent of a country's ICF sensitivity and its evolution through time. I find that, in aggregate, ICF sensitivity has also faded around the world; yet it has remained high in countries with low economic and financial development. Further, I find that the access to external finance, especially equity finance, is a key channel through which country-level development affects the sensitivity of investment to internal cash flow. In more developed countries, external finance has become more accessible for firms when their internal cash flow is insufficient, thereby reducing their reliance on internal cash flow. The results indicate that once a country advances to a certain degree of financial and economic development, it becomes more efficient in allocating resources and therefore financial constraints at the individual firm level become less binding. A growing literature has documented different financial implications of a concentrated customer base. In the second chapter, I examine how customer concentration affects institutional investors' investment decisions. I find that a firm's customer concentration tends to attract different groups of institutional investors, depending upon their investment horizons. Specifically, those institutions who trade actively (short-term) would buy the stocks of firms with a more concentrated customer base. Conversely, those institutions who trade less actively (long-term) would buy the stocks of firms with a less concentrated customer base. While the preference of long-term investors is supported by the increased risk associated with the dependency on a few large customers, I find that the improved stock liquidity is the channel through which a concentrated customer base attracts short-term investors. Further, my findings cannot be explained by information transfer along the supply chain.
Essays On Entrepreneurial Finance
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Author : Hyunsung Daniel Kang
language : en
Publisher:
Release Date : 2012
Essays On Entrepreneurial Finance written by Hyunsung Daniel Kang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with Accounting categories.
My dissertation is focused on developing a better understanding of the technology and innovation strategies of corporations and their impacts on firm performance. I am particularly interested in corporate venture capital (CVC), which serves as a strategy for accessing external technology for corporate investors and as an alternative source of financing and complementary assets for start-ups. I have investigated the conditions under which corporate investors and start-ups achieve the strategic goals by establishing CVC ties, and on estimating the technological and financial gains created by the CVC ties. Specifically, I have concentrated on when and where CVC ties are established in order to maximize economic value. The former relates to a timing issue, whereas the latter is a space issue of CVC investments. In the first essay, I examine corporate investors' decisions to establish CVC ties and their subsequent strategic actions. Consistent with the real options perspective on CVC investments, I find that CVC investments can help corporate investors effectively search for and select future acquisition or licensing partners by reducing asymmetric information and uncertainty that may characterize markets for technology. Specifically, CVC investments facilitate the external acquisition of technology by substituting for a corporate investor's absorptive capacity, as reflected by its upstream research capabilities. CVC investments instead complement the portfolio of internally generated new products, since they allow highly productive corporate investors to shift their focus onto exploratory initiatives with the objective of selecting future technology and partners. Finally, CVC investments facilitate exploratory investments in distant technological areas that are subsequently integrated through licensing or acquisitions. These findings contribute to emerging research on the organization and financing patterns of external R & D activities. In the second essay, I investigate the nature of the relationship between technological spillovers and capital gains created by CVC investments for corporate investors. Using a simple equilibrium model and data from the global bio-pharmaceutical industry between 1986 and 2007, I find that these technological spillovers and capital gains are complements. This complementarity is enhanced when CVC investments are made in post-IPO and technologically diversified start-ups. Beyond providing a broad benchmark for heterogeneous returns on CVC investments, this study has important implications for corporate investors and start-ups. In particular, to the extent that capital gain is greatly determined by changes in the market values of start-ups, it implies that CVC investments can create value for start-ups as well as corporate investors. These mutual benefits can be greatly determined by when (e.g., post-IPO start-ups) and where (e.g., technologically diversified start-ups) CVC investments are made. In the third essay, I analyze the contextual factors that impact the probability of start-ups' obtaining financing through independent venture capitalists and corporate investors. The systematic empirical evidence based on a three-stage game theoretic model suggests that start-ups that possess better evaluated technology tend to be financed through independent venture capitalists, rather than corporate investors. In contrast, start-ups tend to be financed through corporate investors, rather than independent venture capitalists, when their intellectual properties are effectively protected and their research pipelines contain multiple products. These findings provide a theoretical basis to explain why several types of investors co-exist in the entrepreneurial financing market. Moreover, the existence of such determinants indicates that, although investors traditionally have been viewed as the powerful partner that dominates the investment decision, start-ups are also active decision makers in investment ties.
Essays On Institutional Investors In The Bond Market
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Author : Yifan Yu
language : en
Publisher:
Release Date : 2021
Essays On Institutional Investors In The Bond Market written by Yifan Yu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with categories.
This thesis consists of three chapters on institutional investors in bond market. Chapter 1 examines duration hedging behavior in corporate bond market by studying investment decisions of life insurance companies, the largest institutional investors in this market. I find that life insurers are tilting their corporate bond portfolios towards bonds with higher duration as interest rates decrease to historical lows since the 2008 financial crisis. This hunt-for-duration behavior is due to life insurers' interest rate risk hedging to ensure better duration matching between their assets and liabilities. I further show that hunt-for-duration by life insurers can drive overpricing of corporate bonds when negative monetary policy surprises hit. Chapter 2 investigates how the risk-based capital (RBC) reform in insurance industry initiated in year 1993 affects life insurers' investment behavior in corporate bonds, and how RBC-induced distortion in insurers' investment practices could have an impact on credit allocation, and ultimately real investment in the economy. Following the reform, I observe that insurers tilt their portfolios towards the lowest rated corporate bonds within a bond risk category defined by the RBC rule. Through shifting insurers' bond demand, I find that the RBC reform changes the credit supply conditions to a particular group of firms: those that have credit ratings barely fitting into a low-risk category and belong to industries where insurers hold more corporate bonds before the reform. Furthermore, I find that these firms take advantage of the more favorable credit allocation conditions to increase investment and employment after the reform. These results highlight a channel through which regulatory reform in insurance industry can bear real consequences.Chapter 3 studies whether life insurers rebalance their bond portfolios during Quantitative Easing (QE) programs initiated by the Federal Reserve (Fed) since the 2008 financial crisis. I find that life insurers sell QE securities and replace them with corporate bonds over certain QE periods. Moreover, life insurers rebalance toward corporate bonds in the lowest rating tier within a risk category defined by the RBC rule under which insurers are regulated. Overall, these findings show that QE's portfolio rebalancing channel can work through the life insurance sector.
Essays In Corporate Finance
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Author : Pavel Zryumov
language : en
Publisher:
Release Date : 2015
Essays In Corporate Finance written by Pavel Zryumov 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.
This thesis studies the investment and financing decisions of firms in dynamic markets with asymmetric information. In the first chapter I analyze the effects of time-varying market conditions and endogenous entry on the equilibrium dynamics of markets plagued by adverse selection. I show that variation in gains from trade, stemming from market conditions, creates an option value and distorts liquidity when gains from trade are low. An improvement in market conditions triggers a wave of high-quality deals due to the preceding illiquidity and lack of incentives to signal quality. When gains from trade are high, the market is fully liquid; high prices and no delay in trade attract low-grade assets, and the average quality deteriorates. My analysis also reveals that illiquidity can act as a remedy as well as a cause of inefficiency: partial illiquidity allows for screening of assets and restores efficient entry incentives. I demonstrate model implications using several applications: early stage financing, initial public offerings, and private equity buyouts. Chapter 2, which is a joint work with Ilya Strebulaev and Haoxiang Zhu, reexamines the classic yet static information asymmetry model of Myers and Majluf (1984) in a fully dynamic market. A firm has access to an investment project and can finance it by debt or equity. The market learns the quality of the firm over time by observing cash flows generated by the firm's assets in place. In the dynamic equilibrium, the firm optimally delays investment, but investment eventually takes place. In a ``two-threshold'' equilibrium, a high-quality firm invests only if the market's belief goes above an optimal upper threshold, while a low-quality firm invests if the market's belief goes above the upper threshold or below a lower threshold. However, a different ``four-threshold'' equilibrium can emerge if cash flows are sufficiently volatile. Relatively risky growth options are optimally financed with equity, whereas relatively safe projects are financed with debt, in line with stylized facts. Finally, Chapter 3, which is based on an ongoing work with Ilya Strebulaev and Haoxiang Zhu, extends the analysis of Chapter 2 by allowing cash accumulation within the firm. We consider a firm whose managers possess superior information about the firm's value relative to the rest of the market and analyze the optimal timing of equity issuance. We show that equilibrium features socially inefficient, but privately optimal, delay of investment and equity financing of positive NPV projects. Waiting allows high quality firms to accumulate internal cash and increase investors' beliefs, therefore, reducing the cost of adverse selection. In the dynamic equilibrium low quality firms delay investment as well in hope of being mistaken for the high quality ones. However, when market beliefs are sufficiently low and/or internally accumulated level of cash is sufficiently high the low quality firm prefers to reveal itself.
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.