Three Essays on Corporate Finance
The dissertation comprises 3 papers, available at:
1. Social networks and risk taking: Evidence from corporate control activities (2012) working paper
2. Are bond ratings informative? Evidence from regulatory regime changes (2018) working paper
3. Governance and post-repurchase performance (2016) Journal of Corporate Finance. 39, 155-173.
Abstract
This paper investigates the impact of social ties between the Chief Executive Officer (CEO) and board members on corporate risk-taking in mergers and acquisitions (M&As) and on shareholder value. Using a measure of CEO-director connections in a large sample of U.S. firms from 2000 to 2010, we document that boardroom connections lower firm acquisitiveness. If connected CEOs undertake M&As, they are less likely to choose focus acquisitions, and more likely to pay in stock. CEO-board connections do not enhance firm value in M&As. Higher levels of boardroom connection are associated with lower announcement returns and lower subsequent return on assets. Our results are robust to alternative explanations and various robustness checks.