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I examine the determinants and implications of the level of director monitoring. I use the distance between directors' domiciles and firm headquarters as a proxy for the level of monitoring and the introduction of a new airline route between director domicile and firm HQ as an exogenous shock to the

I examine the determinants and implications of the level of director monitoring. I use the distance between directors' domiciles and firm headquarters as a proxy for the level of monitoring and the introduction of a new airline route between director domicile and firm HQ as an exogenous shock to the level of monitoring. I find a strong relation between distance and both board meeting attendance and director membership on strategic versus monitoring committees. Increased monitoring, as measured by a reduction in effective distance, by way of addition of a direct flight, is associated with a 3% reduction in firm value. A reduction in effective distance is also associated with less risk-taking, lower stock return volatility, lower accounting return volatility, lower R&D; spending, fewer acquisitions, and fewer patents.
ContributorsBennett, Benjamin (Author) / Coles, Jeffrey (Thesis advisor) / Hertzel, Michael (Committee member) / Babenka, Ilona (Committee member) / Custodio, Claudia (Committee member) / Arizona State University (Publisher)
Created2014
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This dissertation consists of two essays on corporate policy. The first chapter analyzes whether being labeled a “growth” firm or a “value” firm affects the firm’s dividend policy. I focus on the dividend policy because of its discretionary nature and the link to investor demand. To address endogeneity concerns, I

This dissertation consists of two essays on corporate policy. The first chapter analyzes whether being labeled a “growth” firm or a “value” firm affects the firm’s dividend policy. I focus on the dividend policy because of its discretionary nature and the link to investor demand. To address endogeneity concerns, I use regression discontinuity design around the threshold to assign firms to each category. The results show that “value” firms have a significantly higher dividend payout - about four percentage points - than growth firms. This approach establishes a causal link between firm “growth/value” labels and dividend policy.

The second chapter develops investment policy model which associated with du- ration of cash flow. Firms are doing their business by operating a portfolio of projects that have various duration, and the duration of the project portfolio generates dif- ferent duration of cash flow stream. By assuming the duration of cash flow as a firm specific characteristic, this paper analyzes how the duration of cash flow affects firms’ investment decision. I develop a model of investment, external finance, and savings to characterize how firms’ decision is affected by the duration of cash flow. Firms maximize total value of cash flow, while they have to maintain their solvency by paying a fixed cost for the operation. I empirically confirm the positive correlation between duration of cash flow and investment with theoretical support. Financial constraint suffocates the firm when they face solvency issue, so that model with financial constraint shows that the correlation between duration of cash flow and investment is stronger than low financial constraint case.
ContributorsLee, Tae Eui (Author) / Mehra, Rajnish (Thesis advisor) / Tserlukevich, Yuri (Thesis advisor) / Custodio, Claudia (Committee member) / Arizona State University (Publisher)
Created2015
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Abstract<br/>Foreign Direct Investment has been pursued to economically integrate countries and to increase economic development. This has been accomplished partly through the WTO and Free Trade Agreements (FTAs), which have spurred foreign direct investment (FDI) by removing barriers to trade tariff and nontariff. In addition, they also created a framework

Abstract<br/>Foreign Direct Investment has been pursued to economically integrate countries and to increase economic development. This has been accomplished partly through the WTO and Free Trade Agreements (FTAs), which have spurred foreign direct investment (FDI) by removing barriers to trade tariff and nontariff. In addition, they also created a framework and legal guidelines and regulations for investment and trade. Research suggests that this is the case when looking at country level data before and after FTAs go into effect. Although the existing literature offers important insights a weakness is it does not often look at the relationship between FTAs and FDI by analyzing firm level data. This is an important relationship to be studied as, beyond governments multinational companies (MNCs) are one of few key actors that can benefit the most and have the capabilities to take advantage of these FTAs. Therefore, studying the relationship between MNCs and their investments both before and after an FTA is signed is important to see if FDI would change in response to Free Trade Agreements and have an impact at the MNC level deployment of FDI. This would be significant to see if the current steady for attracting FDI is working. This is also important as FDI helps countries develop. Therefore, it can be seen as an exceptional contribution to the overall research on the subject. In this paper I will explore how companies have reacted to the formation of FTAs as well as the distinct effects of North-South South-South and North-North Agreements on firm’s investment strategies, using firm level data and drawing on interviews with multiple trade officials.

ContributorsHawks, Noah K (Author) / Gamso, Jonas (Thesis director) / Roy, Nelson (Committee member) / Ault, Joshua (Committee member) / Thunderbird School of Global Management (Contributor, Contributor) / Barrett, The Honors College (Contributor)
Created2021-05