Essays in financial economics.

详细信息   

• 作者：Sun ; Qi.
• 学历：Doctor
• 年：2014
• 毕业院校：University of Southern California
• Department：Economics.
• ISBN：9781321039382
• CBH：3628323
• Country：USA
• 语种：English
• FileSize：941644
• Pages：155

文摘

This dissertation studies how firms make investment and employment decisions when they face frictions in capital and labor markets. Specifically,I study i) how firms manage liquidity under uncertain financing conditions； ii) how long-term labor contracts change firms capital structure decisions； and iii) how labor bargaining affects firms financial and employment policies. In first chapter entitled "Cash holdings and risky access to future credit," I quantify a new motive of holding cash through the channel of financing risk. I show that if the access to future credit is risky,firms may issue long-term debt now and save funds in cash to secure the current credit capacity for the future. I structurally estimate the model and find that this motive explains about 30% of cash holdings in the data. Counterfactual experiments indicate that the value of holding cash is around 8% of shareholder value. The second chapter "Labor liability dynamics and corporate debt," co-authored with Xiaolan Zhang,studies the impact of long-term wage contracts on firms capital structure decisions. We show that firms not only borrow directly from external investors through debt contracts,but also borrow implicitly from workers by paying lower wage today and promising higher compensation in the future. As a result,firms hold two types of liabilities: financial debt and labor liability. We also demonstrate that given the firms total liability capacity captured by the distance to default),the motive of employee retention crowds out financial debt. That is,firms with higher labor liability have lower financial leverage. The third chapter "Credit and hiring,jointly written with Vincenzo Quadrini,presents a model in which the compensation of workers is determined through bargaining and firms choose the financial structure and employment jointly. The purpose of our model is to understand the linkage between financial markets and employment through a bargaining channel. The basic mechanism of the model is a follows: Higher debt allows firms to negotiate lower wages and therefore increases the incentive to hire more workers. At the same time,however,higher debt also increases the financial fragility of the firm,that is,the probability of financial distress. The solution to this trade-off determines simultaneously optimal debt and optimal hiring. When the financial condition of the firm improves,the likelihood of financial distress declines,making the debt more attractive. This,in turn,improves the firms bargaining position with workers,increasing the incentive to hire more employees. It is through this mechanism that improved financial market conditions generate a hiring boom. Overall,my dissertation seeks to understand the interaction effects between firms financial policies financing and liquidity) and real decisions investment and employment). Essentially,firms make decisions jointly in a dynamic setting. They choose different variables to maximize the shareholders value,subject to various frictions in capital and labor markets. The results of value maximization imply that in equilibrium marginal benefits/costs of all possible tradeoffs are equalized. I consider three tradeoffs in the those three chapters: i) the tradeoff between cash and unused lines of credit in liquidity management； ii) the tradeoff between borrowing from external investors through debt contracts and borrowing from internal workers through wage contracts； and iii) the tradeoff between increasing debt to negotiate lower wages and decreasing debt to avoid financial distress.