Interactions between corporate financing and investment decisions.
详细信息
文摘
This dissertation contains two chapters. The first chapter studies firms' optimal financing strategy when they face uncertain and short-lived investment opportunities such as innovations. The results can reconcile a number of puzzling empirical findings in the literature: large leverage jumps without investment needs, greater stock underperformance after equity offerings than after debt offerings, debt conservatism, and observational equity market timing. The second chapter studies agency costs associated with a self-interested and risk-averse manager's investment timing decision, and the effects of compensation policy and capital structure on managerial discretion. We find that performance pay and golden parachutes both have non-monotonic effects on the agency conflict, and financial contracting can be very effective in mitigating managerial discretion.