This dissertation is comprised of two essays on finance. In the first chapter, I investigate whether and to what extent unionization would... Show moreThis dissertation is comprised of two essays on finance. In the first chapter, I investigate whether and to what extent unionization would influence the compensation to the non-executive employees. In the second chapter, I explore how social capital would impact regional innovation performance by private firms.In the first chapter, I examine the effects of unionization on stock options granted to non-executive employees. Adopting a regression discontinuity design, I find that employees receive more stock options after the union election wins. The positive association is more pronounced when unions have more bargaining power and when free-riding problems are less severe. Further, I provide evidence that employees receive more stock options when CEOs are entrenched. Finally, I show that stock options provide risk-taking incentives to non-executive employees. This work provides a potential explanation to the union wage premium puzzle that unions utilize stock options to increase non-executive employees’ total compensation.
In the second chapter, I investigate whether and to what extent social capital may affect regional innovation by private firms in the U.S. I document that regional social capital is positively associated with the quantity, quality, and novelty of county-level innovation by private firms. This effect is more prominent in regions with a lower supply of financial capital. My findings further suggest that social capital is complementary to investment in research and development. Using a Spatial Durbin Model, I report that regional social capital has significant spillover effects in boosting the innovation of neighboring counties. Show less
