Essays in Corporate Finance
Date
2021-12-17
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Abstract
This thesis consists of two essays in corporate finance. In the first essay, which is joint work with Yrjo Koskinen and J. Ari Pandes, we use the enactment of limited liability legislation across Canadian provinces to examine the effect of the change in liability status on firm outcomes for a group of public firms known as income trusts. We show that the switch from unlimited to limited liability increases trusts' institutional ownership, net external financing, investments, profitability, payouts, and riskiness. Our results are stronger for energy trusts, which are more capital-intensive and face potentially greater liability risks. Our event study shows positive cumulative abnormal returns around the legal changes. Overall, we present a novel approach to test the impact of limited liability on firms.
In the second essay, which is joint work with Yrjo Koskinen and J. Ari Pandes, we provide an evidence of spillover effects of environmental violations. In particular, we investigate how environmental violations by polluting firms impact their (direct) neighboring peers. Using a difference-in-differences methodology, the paper shows that firms operating in the same industry and having plants located close to the violating firms are negatively impacted by the polluting firms' environmental violations. Peer firms experience lower external financing and lower valuations. However, we also find firms with higher (ex-ante) environmental scores are less negatively affected by the violations.
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Nguyen, N. (2021). Essays in Corporate Finance (Doctoral thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca.