Essays on the Impact of Non-Financial Stakeholders on Firms’ Financing Policies

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Wang, Jin
Non-Financial Stakeholder , Financing Policy
In this thesis we investigate whether firms’ relationships with non-financial stakeholders affect their financing policies. We find that the firms that place a higher value on reputation for treating employees generously maintain lower debt ratios. Furthermore, we find that the firms whose business relies on major customer-supplier relationships adopt more flexible payout policies because of relationship-specific investments. Finally, we find that the high financial distress costs rather than the hold-up problem associated with relationship-specific investments affect firms’ financing policies. Overall, our results suggest that firms’ relationships with non-financial stakeholders are important determinants of their financing policies.
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