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Title: Essays in empirical corporate finance
Author: Lei, Zicheng
ISNI:       0000 0004 5916 0148
Awarding Body: University of Warwick
Current Institution: University of Warwick
Date of Award: 2016
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The first essay (Chapter 2) investigates debt-financed share repurchases. We find that debt-financed share buybacks generate positive short-term and long-run abnormal stock returns. Leveraged buyback firms have more debt capacity and lower growth prospects ex ante, increase leverage and reduce investments more sharply ex post than cash-financed buyback firms. Firms that are over-levered ex-ante are associated with lower returns and real investments following leveraged buybacks. The lower announcement returns are concentrated on firms with weaker corporate governance. Leveraged buybacks also have lower completion rates than cashfinanced buybacks. The evidence is consistent with leveraged buybacks enabling firms to optimize their leverage, on average benefiting shareholders. The benefits decrease with a firm’s leverage ex ante. The second essay (Chapter 3) studies the effect of the Supreme Court landmark Citizens United decision on how firms adjust their political activism under the constraints imposed on them by institutional investors. The essay shows that firms with more political connections have lower announcement returns, which are concentrated in firms with high institutional ownership. Furthermore, firms headquartered in states with corporate campaign contribution bans before Citizens United have relatively fewer state political connections afterwards. This result is concentrated in firms with low institutional ownership. The evidence is consistent with institutional investors’ preference to not use the new avenue of political activism. The third essay (Chapter 4) tests the dividend catering theory proposed by Baker and Wurgler (2004b) by using the Internet search volume for dividend-related keywords as a direct measure of investors’ dividend sentiment. We find that firms initiate or increase dividends when the dividend sentiment is stronger. These effects are concentrated on firms located in high dividend sentiment states. They are robust after controlling for firm characteristics, risk, and the dividend premium. Our results are consistent with managers catering to investor’s time-varying demand for dividendpaying stocks.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HG Finance