Use this URL to cite or link to this record in EThOS: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.775755
Title: Essays in empirical corporate finance
Author: Wang, M.
Awarding Body: University of Exeter
Current Institution: University of Exeter
Date of Award: 2019
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Abstract:
I investigate how the firm diversification affects the value of large customers and large suppliers, and how the presence of large customers affects corporate payout policy. In Chapter Two, I report the findings that that the value of large customers for shareholders is lower in diversified firms than single-segment firms. I also find that more resources are allocated to a weak segment in a diversified firm when the segment has large customers, and that a diversified firm gives more trade credit to large customers than single-segment firms. Moreover, by using the setting of tariff cut as an exogenous shock, I find that a reduction in the level of large customers is associated with a decrease (an increase) in the value of single-segment firms (diversified firms). Furthermore, I find that the presence of large customers is associated with a higher (lower) announcement return for non-diversifying M&As (diversifying M&As). The results support the hypothesis that firm diversification affects the value of large customers for shareholders through the perspective of bargaining position. Chapter Three examines the relation between firm diversification and the value of large suppliers for shareholders. I find that the value of large suppliers for shareholders is higher in diversified firms than single-segment firms. The presence of large suppliers is positively valued by shareholders in diversified firms through the perspective of relationship-specific investments. In addition, I examine the setting of tariff cut and find that a reduction in the ratio of the purchases made by all suppliers is associated with an increase (a decrease) in the value of single-segment firms (diversified firms). In the event study of M&As, I find that the presence of large suppliers increases both the announcement return and the operating performance of a diversifying M&A. I conclude that the results support the hypothesis that firm diversification affects the value of large suppliers for shareholders through the perspective of relationship-specific investments. Finally, in Chapter Four, I examine whether large customers affect corporate payout policy. In terms of share repurchases, I find that both the cumulative abnormal return and the net change in operating performance around the announcement of share repurchases are lower with the presence of large customers. In terms of dividends, I find that both the cumulative abnormal return around the announcement of an increase in dividends are higher with the presence of large customers. In addition, a firm with the presence of large customers prefers to use share repurchases rather than increase dividends. Also, the presence of large customers reduces the level of total payout. I conclude that the presence of large customers has a different value consequence between share repurchases and dividends as two forms of corporate payout policy either through the channel of bargaining position or the channel of relationship-specific investments.
Supervisor: Tong, Z. ; Wang, P. Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.775755  DOI: Not available
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