dc.contributor.authorFu, Kangkang
dc.date.accessioned2016-02-15T07:03:12Z
dc.date.available2016-02-15T07:03:12Z
dc.date.issued2016-02-15
dc.identifier.citationFu, K. (2016). Three essays on corporate finance. Doctoral thesis, Nanyang Technological University, Singapore.
dc.identifier.urihttp://hdl.handle.net/10356/65988
dc.description.abstractThis dissertation contains three essays on corporate finance. In Essay One, we provide empirical evidence on the adverse effects of supplier firms’ environmental risk exposures on their relationships with principal customers. We document that supplier firms with high environmental risk are less likely to have principal customers. Moreover, from the principal customers’ perspective, a higher level of environmental risk lowers a supplier firm’s probability of being selected relative to its industry peers by its potential customer. Conditional on an ongoing relationship with principal customers, supplier firms with high environmental risk have lower sales to principal customers and shorter relationship durations. These results are more pronounced when customers’ environmental risk is lower. Collectively, our findings suggest that improving the trading relationship with principal customers is an important channel through which firms can benefit economically from being environmentally responsible. Essay Two investigates the capital structure implications of corporate environmental liabilities, which are captured using the amount of firms’ toxic production-related waste. We document that firms with higher environmental liabilities maintain lower financial leverage ratios, suggesting that environmental liabilities work as a substitute for financial liabilities. The substitution effect is more pronounced for larger firms, firms covered by more analysts, firms that have higher sales to principal customers, and firms with greater community concerns. Further analysis shows that less environmentally responsible firms have a lower fraction of bank debt in total debt, all else equal, consistent with the notion that banks are more environmentally sensitive than other lenders. Overall, our findings imply that being environmentally responsible can enhance firms’ debt capacity and improve the availability of bank credit. Essay Three provides evidence that options trading affects firms’ financing decisions. We find that firms with exchange-listed options are more likely to issue equity as opposed to debt. They issue equity more frequently but in smaller amounts and maintain low leverage ratios. The effect of options trading on financing decisions is more pronounced for firms with larger options trading volume, higher information asymmetry, and greater short-sale constraints. Further analysis shows that optioned firms attract more short-term institutional investors, have greater analyst coverage, and experience higher abnormal returns at seasoned equity offerings announcements. These findings are consistent with the notion that options trading reduces firms’ information asymmetry, which makes equity financing more favourable.en_US
dc.format.extent157 p.en_US
dc.language.isoenen_US
dc.subjectDRNTU::Businessen_US
dc.titleThree essays on corporate financeen_US
dc.typeThesis
dc.contributor.supervisorChang Xin (CoB (NBS))en_US
dc.contributor.schoolCollege of Business (Nanyang Business School)en_US
dc.description.degreeDOCTOR OF PHILOSOPHY (NBS)en_US
dc.contributor.supervisor2Kang Jun-Koo (CoB(NBS))en_US


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