Essays In Empirical Corporate Finance

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Zhang, Shu
Mergers and Acquisitions , Supply Chain Financing , Trade Credit
This thesis explores several aspects of empirical corporate finance. The three essays in my dissertation are in line with the two streams of empirical corporate finance research: mergers and acquisitions (M&A) is with the transaction-based stream whereas supply chain financing is in line with the contractual finance research. In the first essay, I use the Jump Start Our Business Act (JOBS Act) in 2012 as a quasi-natural experiment to examine how increased access to the IPO market affects the bargaining power of private targets in mergers and acquisitions. I find that U.S. private targets are valued higher after the JOBS Act relative to public targets acquired by U.S. acquirers. The announcement returns of acquirers that took over U.S. private targets after the JOBS Act are lower. I find that the effect is more pronounced for target firms with higher disclosure costs and for firms with less bargaining power. In the second essay, I examine the information role of media outlets, namely newspapers, in the supply chain. I exploit a comprehensive dataset of U.S. supplier-customer pairs as well as news coverage by newspapers, of customers over the period 2000 to 2016 to examine how suppliers utilize information from the media to manage their primary customers. I document that a one standard deviation change in the media coverage of a firm’s customer translates into a 5.29% increase in the possibility of it being recognized as a primary customer. Enhanced media coverage also leads to more liberal trade credit terms. I rely on local news outlets’ shutdowns and airline routes closedowns to establish causality. In the third essay, I examine how investors’ acquisition of information from EDGAR filings influences firms’ trade credit. I use the download intensity of the SEC’s EDGAR system and find that more downloading decreases aggregate trade credit offering, and the effect is only significant for the distant investors who have less information about the firms. The results are consistent with my model that information acquisition by investors without a complete understanding about the managers’ actions makes them focus on short-term performance.
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