Empirical essays in corporate finance: Testing theories of market imperfections and costly contracting.

摘要

I empirically examine the theoretical determinants of the firm's investment decision. The first essay examines the evidence on the value of internal financing to the firm. A pooled cross-sectional, time-series test is employed. Results are consistent with the hypothesis that internal financing is positively related to firm value. The second essay examines the evidence on the three theories which explain a distortion of corporate investment. A pooled cross-sectional, time-series test is employed. Results are consistent with hypothesis that the shareholders impose a myopic investment policy to prevent the manager from making long-term investments which require his continued employment with the firm, and then threatening to leave if his compensation is not increased. The third essay examines the evidence on the whether costly long-term informed trading causes the firm to under-invest in projects with long-term cash flows. An event study test is employed. The results are consistent with the hypothesis that the high cost of long-term informed trading results in the firm under-investing in projects with long-term cash flows.