This thesis consists of two essays on empirical corporate finance. The first essay examines the influence of corporate tax on corporate social... Show moreThis thesis consists of two essays on empirical corporate finance. The first essay examines the influence of corporate tax on corporate social responsibility (CSR) investment. This essay takes advantage of the dynamic changes on state corporate taxes from 2003 to 2016 and explores the causal effects of the tax changes on firms’ CSR outcomes. Applying a difference-in-difference approach, I find that tax effects on CSR are asymmetric. Tax cuts lead to significant improvement of CSR ratings, especially in the concern issues. Tax hikes, on the other hand, lead to deterioration of CSR strength, but have no effect on CSR concerns. I also find that CSR investment from financial constrained firms is more sensitive to tax changes. The second essay studies the financial effect of suppliers’ initial public offering (IPO) on their customer companies. By analyzing matched supplier companies and their large customers, I find that customer companies lose value in both short-run and long-run time periods after suppliers’ IPO events. These customer companies also have higher risk compared to those whose suppliers do not go public. Moreover, I explore the channels of suppliers’ IPO effect on their customers. The results show that suppliers diversify customers and reduce trade credit after IPO. Finally, I find that the supply chain relationships are more likely to terminate after suppliers going public. Show less
