Essays in corporate finance.
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文摘
This dissertation studies the effects of capital market imperfections. The first and second essays explore the impact of capital market imperfections on firm operations. The third essay investigates the effect of recent regulations on sell-side analysts' practices.;The first essay analyzes the effects of firm-level financial constraints on executive compensation. The difficulty in managing financially constrained firms suggests that shareholders in constrained firms should use higher-powered compensation contracts than those in unconstrained firms. In the framework of a standard principal-agent model, we show a negative relation between pay-performance sensitivities and better access to the capital markets. Empirical results demonstrate that CEO pay-performance sensitivities in financially constrained firms are statistically and economically higher than the pay-performance sensitivities in financially unconstrained firms. Moreover, we find that the total value of CEO's compensation package is higher in constrained firms than in unconstrained firms.;The second essay examines the cross-sectional variation in the marginal value of corporate cash holdings that arises from differences in corporate financial policy. We begin by providing semi-quantitative predictions for the value of an extra dollar of cash depending upon the likely use of that dollar, and derive a set of intuitive hypotheses to test empirically. By examining the variation in excess stock returns over the fiscal year, we find that the marginal value of cash declines with larger cash holdings, higher leverage, better access to capital markets, and greater as firms choose cash distribution via dividends rather than repurchases.;The third essay studies the effect of regulations (Rule NASD 2711, Rule NYSE 472, and the "Global Analyst Research Settlement") on sell-side analysts' research. The results suggest that the regulations have partially achieved their goal of curbing the conflicts of interest's influence over analysts' stock recommendations. After the adoption of the regulations, the likelihood of receiving an optimistic recommendation no longer depends on whether a firm had undergone an IPO/SEO or whether the brokerage house had participated in any such IPO/SEO as an underwriter. Also, following the regulations most major brokerage houses have migrated from the 5-tier rating system into a 3-tier rating system, imposing an overall shift in the distribution of recommendations towards less optimistic recommendations.