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https://hdl.handle.net/2142/87426
Description
Title
Two Essays in Corporate Finance and Investment
Author(s)
Kim, Joonghyuk
Issue Date
2001
Doctoral Committee Chair(s)
Narasimhan Jegadeesh
Department of Study
Finance
Discipline
Finance
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Finance
Language
eng
Abstract
"The second essay, ""Dual-class Stocks: Motivation and Effects on Firm Valuation, Corporate Governance, Capital Structure, and Payout Policy"", addresses several issues in dual-class stocks: why and when firms create dual-class stocks, and how the creation of dual-class stocks affects shareholders' wealth, corporate governance, capital structure, and payout policy. The results suggest that managers adopt the dual-class equity structure to raise additional outside equity capital without losing their control of the firms, rather than an antitakover measure. Adopting dual-class structure has a negative effect on shareholders' wealth that is observable only over a long horizon of time after the change. Dual-class firms tend to have board of directors that provide less effective monitoring roles for outside shareholders even before the change. They tend to keep the composition after the dual-class creation. The results suggest that over a long horizon of time, dual-class firms tend to use equity more than debt for their external capital source. No significant difference in dividend payout policy between dual-class firms and their industry and size matched firms is found."
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