Distortions in Government Contract Awards, Executive Compensation, and Asset Prices: Three Essays in Finance
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In this thesis, I present three papers in finance. Chapter 1 introduces the thesis. Chapter 2 presents the paper Competition for Government Contracts and the Payoff to Political Activism. This paper exploits three shocks to the competition for procurement contracts including a Presidential memorandum, the formation of the Department of Homeland Security, and Hurricane Katrina. I find that greater competition disrupts the positive relationship between political activism by firms and government contract awards such that politically active firms receive reduced benefits. Chapter 3 presents the paper Discrimination in the C-Suite: Do Discriminatory Pay Practices Exist for the Positions of CEO and CFO? I test for discrimination in the C-suite by comparing the compensation and pay-performance sensitivity of white men and individuals belonging to a designated group (women and visible minorities). I find little evidence of discriminatory compensation practices against visible minority executives; however, I find that women receive less compensation in male-dominated industries. Chapter 4 presents Pricing in Auction Markets for Alternative Assets a coauthored paper with Dr. Daniel Thornton. We present a model of an auction market for collectibles and empirically test it using experimental data. Results indicate that overbidding by non-professionals forces professionals out of the market, ensuring that investments in collectibles return less than zero net present value. Chapter 5 concludes.