Essays on corporate finance

Amiri Moghadam, Sadra

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Description

Title

Essays on corporate finance

Author(s)

Amiri Moghadam, Sadra

Issue Date

2015-04-08

Director of Research (if dissertation) or Advisor (if thesis)

Almeida, Heitor

Doctoral Committee Chair(s)

Almeida, Heitor

Committee Member(s)

• Choi, Jaewon
• Fos, Vyacheslav
• Kahn, Charles

Department of Study

Finance

Discipline

Finance

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Abstract

This dissertation contains three chapters. Below are the individual abstracts for each chapter. Chapter 1: The Effect of Corporate Governance on Debtholders: Evidence from CDS Spread Response to Shareholders’ Votes This chapter provides causal estimates in support of the hypothesis that improvements in corporate governance benefit the debtholders. By using the outcome of votes on shareholder- sponsored governance proposals at annual meetings we find that passing a proposal that increases shareholder rights reduces the firm’s default risk as measured by adjusted CDS spreads. Exploiting the discontinuity in the vote outcome around the majority threshold, we find that passing a governance proposal lowers the cumulative adjusted CDS spreads by about 6 bps in a two-day window around the voting date. We find that CDS market reaction is larger in the case of non-G-Index related provisions and for non-investment grade firms. Moreover, consistent with the short-run market reaction, the firm credit rating improves on average by about half a notch in two years after the voting, further supporting the hypothesis in the long- term. Chapter 2: Local Capital Market and Small Firm Liquidity Management This chapter studies the effect of local bank deposit on the liquidity management of local companies. Local companies save less cash when there is more local bank deposit, but they do not have access to more credit line. Hence, the results do not support the hypotheses that companies have access to credit line easier if they are in an area with more local bank deposit. Chapter 3: Loan Sales and Bank Liquidity Risk Management: Evidence from the Shared National Credit Program This chapter investigates the impact of commercial banks’ liquidity risk management on bank loan sales. We track the dynamics of bank loan share ownership in the secondary market using data from the Shared National Credit Program, a credit register of syndicated bank loans administered by U.S. regulators. We examine the 2007-2009 financial crisis as a market-wide liquidity shock and control for loan demand using a loan fixed effects approach. We find that banks with a greater reliance on wholesale funding at the onset of the crisis were more likely to exit loan syndicates during the crisis. Our analysis identifies the importance of bank liquidity risk management as a motivation for loan sales, in addition to the credit risk transfer motive emphasized in prior literature.

Graduation Semester

2015-5

Type of Resource

text

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Copyright and License Information

Copyright 2015 Sadra Amiri Moghadam

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