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THREE ESSAYS ON CORPORATE FINANCE
Title
THREE ESSAYS ON CORPORATE FINANCE
Creator
Wang, Jianrong
Date
2020
Description
This dissertation is comprised of three distinct but related essays in corporate finance. In the first essay, I examine how the CEOs paid with...
Show moreThis dissertation is comprised of three distinct but related essays in corporate finance. In the first essay, I examine how the CEOs paid with inside debt utilize corporate social responsibility activities to reduce firm risk taking. In the second and third essays, I explore the possible determinants of private placement. The first essay focuses on managerial incentive induced by debt-like compensation such as deferred compensation and defined benefit pensions. Building on cumulative prospect theory and instrumental stakeholder theory, I hypothesize that CEOs paid with debt in their own firms have risk-reduction incentives, and corporate social responsibility (CSR) activities mediate the relationship between debt-like compensation and firm risk taking. Furthermore, I argue that the mediated relationship between CEO debt-like compensation and firm risk taking is context dependent, and I propose that two contingencies, namely environmental dynamism and munificence, moderate the mediated process. My analyses, based on a large longitudinal dataset of nonfinancial US firms, lend strong support for these hypotheses. The second essay examines the impact of firm’s social capital on the cost of Rule 144A debt. I find that Rule 144A debt issuing firms headquartered in the high social capital county pay lower yield spread their peers. Furthermore, the finding suggests that the effect of social capital becomes weak when the issuers have more firm-specific public information and credit records. The relation between social capital and the cost of debt is contingent on industry environment. The results reveal that firms located in high social capital counties have low bankruptcy likelihood and low risk level after Rule 144A debt issuance. The third essay focuses on the role of prior technology alliances in the PIPE issuance. Relying on the data collected from Placement Tracker and SDC platinum, I empirically investigate the relationship between issuers’ technology alliance experiences and their PIPE offering contracts. I document that the greater alliance experiences at the time of the PIPE issuance, the smaller PIPE price discount and fewer contract terms that are favorable to investors. The results indicate that the technology alliance experience alleviates the information asymmetry between issuers and investors and improve issuers’ bargaining power. I further find that issuers with more alliance activities exhibit a more positive announcement effect and outperform in the long run. Moreover, the effect of technology alliance experience is stronger if the issuers partner with large firms, whereas the effect is weaker if the issuers are in high-tech industries.
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