Finance Theses and Dissertations

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Browsing Finance Theses and Dissertations by Subject "Corporate governance"

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    Agency Problems and Cash Savings from Equity Issuance
    (University of Oregon, 2014-09-29) Anthony, Andrea; McKeon, Stephen
    I examine the effect of ownership structure on firms' propensities to save the proceeds of a share issuance as cash. Specifically, I focus on changes in cash savings at the time of a seasoned equity offering (SEO), a moment at which the firm experiences a large inflow of cash, to determine whether ownership structures such as managerial blockholdings or the presence of institutional investors materially affect firms' decisions regarding their level of cash savings. I find that firms with managerial blockholders are more inclined to save share issuance proceeds as cash, relative to firms with outside blockholders or no blockholders present. This finding could be interpreted as consistent with either managerial entrenchment or incentive alignment, so I distinguish between these competing forces by examining SEO announcement returns. The market's reaction to SEO announcements when managerial blockholders are present is significantly worse on average when the firm has excess cash, lending support to the entrenchment explanation. I also find that firms with greater total institutional ownership save more cash from equity issuance, which is consistent with the theory that greater firm monitoring allows optimal corporate cash holdings to increase because shareholders are less concerned about potential misuses of cash.
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    Are Good Deeds Rewarded? Director Awards and the Market for Directorships
    (University of Oregon, 2015-08-18) Tran, Hai; Del Guercio, Diane
    Prior studies document that board directors who fail to act as effective monitors of management are penalized by the labor market in the form of fewer subsequent board seats. However, there is little evidence on how the market rewards directors for exceptional advising and monitoring on corporate boards. In this paper, I use national director awards as a positive shock to directors’ reputations and examine changes in board seats for award-winning directors. Award-winning directors gain more board seats than non-winning directors, both after and before the awards. Event study tests suggest that the quality of award-winning directors may have been revealed to the labor market before the awards but not to the broader stock market. Stock market reactions to appointments of award-winning directors are positive and statistically significant only after the awards, not before.