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http://hdl.handle.net/11375/13210
Title: | THREE ESSAYS IN EMPIRICAL CORPORATE FINANCE |
Authors: | Khokhar, Abdul Rahman |
Advisor: | Sarkar, Sudipto Jiaping Qiu; Trevor Chamberlain |
Department: | Business |
Keywords: | Empirical Corporate Finance;Cash Holdings;Dividend Policy;Regulation;Information Asymmetry;Finance and Financial Management;Finance and Financial Management |
Publication Date: | Oct-2013 |
Abstract: | <p>This thesis explores the following three important issues in the field of corporate finance: window dressing in corporate cash holdings, market effects of SEC regulation of short-term borrowing disclosure and market response to dividend change announcements by unregulated versus regulated firms.</p> <p>First, I find strong evidence of upward window dressing in cash holdings by U.S. industrial firms during the fourth fiscal quarter. This behavior is robust to several controls and a December year-end dummy. Further cross-sectional analysis reveals that the window dressing is sensitive to firm size and level of information asymmetry. I also find that firms manipulate discretionary accruals to dress up fourth quarter cash, perhaps to gain favourable credit terms on issuing short-term debt.</p> <p>Second, I use portfolios of financial and non-financial SEC registrants to examine the market reaction to proposed SEC short-term borrowing disclosure regulation. Using event study methodology, I find that the market reaction is positive and significant at the announcement date and negative and significant at the voting date. Overall, I observe a positive market reaction, indicating the usefulness of the disclosure from the vantage point of users. The results for various subsets confirm the expectations and suggest that a “one-size-fits-all” approach to regulation is undesirable.</p> <p>Finally, I use large samples of dividend increase and decrease announcements for the period 1960 to 2010 in order to compare stock price reactions of unregulated and regulated firms. I observe a stronger market reaction to the dividend increase announcements of unregulated firms compared to those of regulated firms after controlling for firm characteristics, market factors and contemporaneous earnings announcements, a result consistent with the dividend signaling hypothesis and uniqueness argument for regulated firms. However, I find that the market reaction to dividend decrease announcements is similar for unregulated and regulated firms. The cross-sectional analysis further confirms that the stronger stock price reaction to dividend increase announcements of unregulated firms is associated with the level of information asymmetry.</p> |
URI: | http://hdl.handle.net/11375/13210 |
Identifier: | opendissertations/8031 9101 4448533 |
Appears in Collections: | Open Access Dissertations and Theses |
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fulltext.pdf | 1.62 MB | Adobe PDF | View/Open |
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