Aquesta tesi esta composada per tres assaigs. Cadascún dels assaigs presenta investigació empírica original i independent analitzant els impactes de les connexions politiques sobre l’economia. Els articles fan una contribució significativa a aquesta literatura empírica, al mateix temps que subratllen les limitacions i desafiaments amb els que actualment s’enfronten els investigadors d’aquest camp. La recerca que aquí es presenta aplica desenvolupaments als metodes de recerca empirica que milloren la fiabilitat dels resultats. En el segon capitol s’estima l’impacte d’un aconteixement sorpresa a nivell polític sobre els retorns financers del mercat espanyol. Això inclou els impactes específics en determinats sectors i empreses que estan connectades políticament. En els últims dies de la campanya electoral per les eleccions generals espanyoles de l’any 2004, atacs terroristes van causar la mort de 191 persones que viatjaven en tren a la capital del país, Madrid. Quatre dies mes tard, el partit a l’oposició va guanyar les eleccions generals, en contra de totes les prediccions i enquestes que s’havien fet anteriorment a l’acció terrorista. Aquest canvi d’expectatives presenta una oportunitat única per aplicar tècniques d’event study per contrastar hipòtesis de política econòmica. L’anàlisi mostra que les hipòtesis de captura de polítics per empreses, junt amb problemes d’agència en empreses privatitzades i amb dispersió accionarial, no són rebutjades per les dades. En el tercer capítol, intento superar algunes de les limitacions de la recerca empírica en aquest camp, i exploro l’impacte de les connexions polítiques a les empreses en el rendiment empresarial. Ho faig fent servint les dos principals tècniques empíriques que es fan servir més comunment a la literatura economica: anàlisi centrat en establir les reaccions dels mercats financers a esdeveniments d’índole política; i anàlisi economètric de l’impacte de les connexions polítiques en el rendiment contable de les empreses. Els resultats de l’anàlisi indiquen que en els primers anys dels segle XXI, les connexions polítiques podrien haver tingut un impact negatiu sobre el rendiment de les empreses espanyoles. Tot i que els resultats basats en les reaccions dels mercats financers no són concloents, l’anàlisi economètric sobre mesures contables mostra una relació negativa i estadísticament significativa entre connexions polítiques i beneficis empresarials. Els resultats son consistents quan s’utilitzen diferents variables per mesurar el nivell de connexions polítiques, i també sota diverses especificacions economètriques que incloen regressions amb mètodes de variables instrumentals. Finalment, el capítol 4 considera l’influencia del sector privat en les decisions preses des de l’administració pública. Això contrasta amb l’anàlisi presentat en els dos capítols anteriors i a la majoria de recerca empírica en aquest camp, on el que es considera es generalment l’impacte de les connexions polítiques sobre els resultats econòmics empresarials. L’anàlisi està basat en dades del Regne Unit sobre la concessió de subsidis a empreses per dur a terme recerca i desenvolupament. L’agència responsable de la concessió de subsidis al Regne Unit, la Technology Strategy Board, s’encarrega en primer lloc d’identificar àrees de prioritat tecnològica. Un cop aquestes arees són aprovades i dotades de recursos pel Govern, l’agència s’encarrega de convocar concursos i seleccionar les propostes guanyadores. Els resultats de l’anàlisi suggereixen que el programa de subsidis, tot i ser efectiu en corretgir alguns errors de mercat, està esbiaixat en la distribució dels subsidis cap a aquelles empreses que estan directament connectades amb l’agència. / This thesis is composed by three essays, each presenting independent and original empirical research on the impacts of political connections on the economy. This research makes a significant contribution to such empirical literature. It also highlights the limitations and challenges that are currently faced by researchers in this field and applies developments to the empirical methods which improve the reliability of results. In Chapter 2 I estimate the impact of a surprise political event on the financial returns of the Spanish markets, including the specific impacts on selected sectors and politically connected companies. In the last days of the electoral campaign for the 2004 general election in Spain, on Thursday March 11th 2004, a series of simultaneous terror attacks caused the death of 191 persons in commuting trains in the capital Madrid. Four days later, the opposition party won the election, against all predictions that were made prior to the terror attacks. This change in expectations presents us with a unique opportunity to take advantage of event study techniques to test some politico-economic hypotheses. The analysis shows that such hypothesis of capture of politicians by firms, in itself and combined with agency problems in privatized firms with dispersed shareholdings, is not rejected by the data. In Chapter 3, I undertake to overcome some of the constraints in the empirical literature by exploring the impact of political connections on firm performance by employing the two main empirical approaches that have been applied to ascertain the impact of connections on the performance of firms: analysis of financial markets reactions to political events; and econometric analysis of the impact of political connections on accounting-type measures of firm performance. The results of the analysis indicate that in Spain, in the first years of the 21st century, political connections may have had a negative impact on firms’ profits. Even though results from the financial markets-based analysis are inconclusive, the econometric analysis of accounting-based measures of performance shows a negative and highly statistically significant negative impact of political connections on firm’s performance. The results hold regardless of the particular variable or measure that is used to proxy for political connectedness, and under different considerations of the degree of connections that is considered. The results also hold when controlling for the potential endogeneity that may exist - whereas connections to politicians might result in better (worse) business performance, also changes in business performance might lead to higher (lower) connections. Finally, Chapter 4 considers the influence of the private sector on decisions taken by the public sector. This is in contrast with chapters 2 and 3, and most of the empirical literature on political connections, which consider the impacts of politicians on the economic outcomes of the private sector. The analysis is based on UK data where as in most countries R&D grants are conceded in a beauty contest process. The Technology Strategy Board (TSB), the UK agency responsible for offering such grants, jointly with its funding Government Department, identifies technology and research priority areas, after which specific competitions are run and winning projects selected. The results suggest that whilst the R&D cooperative programme is to an extent effective in targeting the market failures it aims to address, its allocation of grants across the private sector is biased towards connected businesses, after controlling for company and sector specific factors.

In this paper the relation between managerial ownership and conservatism is examined. Managerial ownership decreases agency problems caused by the separation of ownership and control. Managerial ownership increases the time horizon of managers and decreases expropriating behaviour. Conservatism is hypothesized to have the same effect on managers due to the asymmetric timeliness of earnings. This suggest that in firms with lower managerial ownership a demand for conservatism arises to substitute for the alignment function of managerial ownership. This paper test this with two approaches. The first replicates the methodology of previous literature. The findings provide no evidence for substitution between managerial ownership and conservatism. Because the estimators of the first methodology are biased a second method is used applying fixed effects. Consistent with the first approach no supporting evidence is found. However, it finds that firms in the sample have conservative accounting. The main implication of this paper is that rewarding managers with shares is not decreasing their conservative behaviour.

Chief Executive Offier (CEO) characteristics, such as the level of risk aversion, are known to affect corporate financial policies, and therefore are likely to impact corporate liquidity decisions. We examine changes in cash holdings around CEO turnover events, a period in which discrete changes in managerial preferences and abilities are likely to have the most dramatic effect on cash holdings. Our results suggest that cash holdings increase significantly following forced departures. The increase is persistent over the successor's tenure and is robust to controls for the standard firm-level determinants of cash holdings and corporate governance characteristics. We find that higher cash holdings arise mainly through the management of net working capital, as opposed to asset sales or reductions in investment. This suggests that the changes are optimal for shareholders rather than an indication of serious agency problems. This conclusion is supported further by our finding that the marginal value of cash does not decrease following the turnover.

Family or group-owned corporations and informed trading are two features of Taiwan¡¦s capital market. Is there any relationship between the two features? Can we solve this kind of problem by some mechanism of corporate governance? These issues are common concerns for participants of capital markets and government policy makers, therefore, there are many scholars devoting themselves in the related research. This study adopts the work of McInish and Wood (1992), who measure informed trading by calculating standardized bid-ask spread. Moreover, some variables, such as trading volume, risk, stock price, company size, and listing market are taken into account because the literature indicates they may affect bid-ask spread. According to the concept of voting rights and cash flow rights introduced by La Porta, Lopez-De-Silanes, Shleifer, and Vishny (2002) and the concept of fraction of cash flow rights on the voting rights introduced by Claessens, Djankov, and Lang (2000), we use the difference ratio, which is one minus the fraction of voting rights over the cash flow rights, to measure the degree of central agency problems. The corporate governance variables, such as board size, the proportion of outside directors, and institutional shareholdings are employed as moderating variables. Multiple regression models are used to test the hypotheses. According to the test results, we find that the more cash flow rights deviate from voting rights the more informed trading will be and it can be alleviated by increasing board size and hiring big CPA firms for audit purpose; while it can be worsen by adopting more outside directors and institutional shareholdings.

We investigate how the evolution of ownership structure affects corporate financial and operating performance and corporate strategies. In particular, we study whether the shift in control rights away from the dominant shareholder mitigates agency problems and accordingly expropriation of minority investors by the controlling shareholder. More specifically, does the increase in power of the second large shareholder manifest in the firm’s operating and financial performance, and financing and operating strategies? Using ownership data for 1996 and 2008 representing 403 firms from nine East Asian countries, we find strong and robust evidence that the change in the voting rights of the second largest shareholder over these twelve years is associated with higher firm valuation, better operating performance, better access to long term financing, more efficient operation management strategies and a higher dividend payout ratio. Consistent with prior literature that finds multiple large shareholders play an internal governance role and mitigate agency problems, our findings imply that an increase in the voting rights of the second large shareholder improves firm’s corporate governance and mitigates agency problems consequently increasing firm performance and improving strategies.

The equity holders of a firm typically control investment choices but enjoy limited liability, since the value of equity is the firm’s value in excess of the value of debt and other fixed claims. The asset substitution problem allows equity holders to expropriate value from other claimants by shifting downside risk from failed projects. To do so, equity holders substitute riskier investments for those with less risk. In the context of tax choices, firms pursue uncertain tax projects to reduce their current or future tax payments. Given the negative consequences of tax uncertainty documented by prior studies, understanding why firms pursue more uncertain tax projects is important for both internal and external stakeholders. In this study, I construct a model of the firm that highlights how asset substitution incentives influence the adoption of uncertain tax projects. I confirm the inferences from this model empirically to illustrate when firms are more likely to prefer more uncertain tax projects due to the investment distortion created by asset substitution incentives. Specifically, I find that firms in financial distress, firms with high growth potential, and loss firms adopt more uncertain tax projects than other firms. These results provide relevant insight for debt holders, regulators, and enforcement bodies.

Target-Date Funds (TDFs) facilitate retirement planning by varying asset allocation over time with the goal of reducing portfolio risk. We explore potential agency problems in TDFs by examining their return performance and flow-performance relation. We find that TDFs under-perform balanced funds (BFs) which are also approved as a default option along with TDFs in 401(k) plans with automatic enrollment. We show that the under-performance is driven by TDFs that have a fund-of-fund structure and constituent funds with high expense ratios or poor performance within the fund family. Additionally, we discover an absence of flow-performance relation in TDFs while BFs exhibit the convex flow-performance relation shown for mutual funds. Our evidence suggests the presence of agency problems in TDFs arising from investor inertia, weak incentives for fund managers to outperform peers, and opportunities for fund families to gain private benefits.

Esse trabalho tem por objetivo analisar a sensibilidade do investimento ao fluxo de caixa de 356 firmas brasileiras de capital aberto no período de 1997-2010, considerando a estrutura de propriedade e controle. As firmas são classificadas a priori entre subinvestimento e superinvestimento, e reagrupadas conforme o nível de oportunidades de investimento do setor industrial. Com uma versão do modelo acelerador de investimento, estimado pelo método GMM System, o estudo mostra que essa sensibilidade poderia sinalizar oportunidades de investimento, problemas de agência do fluxo de caixa livre e problemas de assimetria de informação. Particularmente, discute-se que o superinvestimento pode ser oriundo tanto dos problemas de agência do fluxo de caixa livre quanto ser uma sinalização ao mercado do volume de oportunidades de investimento. Além disso, também é investigado se firmas com controle familiar, estruturadas como pirâmides e pirâmides controladas por família têm influência sobre o volume de recursos próprios aplicados para financiar os investimentos. As estimativas mostram que os investimentos das firmas consideradas com subinvestimento e grandes oportunidades de investimento podem não ser sensíveis ao fluxo de caixa quando o excesso de direito de voto sobre o direito de propriedade do maior acionista é baixo. Por outro lado, para as firmas consideradas com superinvestimento e poucas oportunidades de investimento, o controle familiar e a pirâmide controlada por família poderiam intensificar essa sensibilidade, caso o controlador detenha níveis extremos de excesso de controle. Esse estudo proporciona evidências de que a maior aplicação de recursos próprios nos investimentos das firmas com superinvestimento e grandes oportunidades de investimento seria, principalmente, uma característica de firmas familiares com o menor desvio entre o direito de voto e o direito de propriedade. Como uma análise adicional, o presente estudo investiga se a relação entre a sensibilidade do investimento ao fluxo de caixa e o excesso de controle do maior acionista é não linear. Os resultados estimados evidenciam a não linearidade dessa relação, exceto para as firmas piramidais familiares classificadas com superinvestimento e poucas oportunidades de investimento. / This study investigates the investment-cash flow sensitivity of a sample of 356 Brazilian listed firms on the period of 1997-2010, considering the ownership and control structure. Firms are grouped into underinvestment and overinvestment, and re-classified according to industrial investment opportunities. Using a version of the accelerator investment model, estimated by the System GMM, the results show that the investment-cash flow sensitivity may indicate asymmetric information, investment opportunities and agency problems of free cash flow. Specifically, it is discussed that the overinvestment may be signaling high investment opportunities or agency problems of free cash flow. The purpose of this study is also investigate whether family control, pyramidal ownership structure, and pyramidal controlled by families (pyramidal-family firms) can influence the level of internal capital used to finance investments. The results show that the investment of underinvestment firms with high industrial investment opportunities may be not sensitive to cash flow when the excess of control rights over cash flow rights of the largest ultimate shareholder is lower. However, for overinvestment firms with low industrial investment opportunities, the family control and pyramidal-family may intensify the investment-cash flow sensitivity when the excess of control rights is high. For lower levels of excess of control rights, the results support that higher investment-cash flow sensitivity of overinvestment firms with high industrial investment opportunities may signal profitability potential of family firms. As an additional analysis, it is also investigated whether the relationship between investment-cash flow sensitivity and the excess of control rights is non-linear. The results confirm the non-linearity of this relationship, except to pyramidal-family firms into the overinvestment group with low industrial investment opportunities.

Title: Agent problems from the entrepreneur's perspectiveA study on how entrepreneurs experience and deal with agency problems in relation to venture capitalists.Level: Master's thesis in Business Administration, 15 creditsAuthors: Khalil Alsaid & Aldin HuskanovicMentor: Jonas GabrielssonExaminer: Per Ola UlvenbladDate: 2023-05-23Problem formulation: How the entrepreneur experiences and handles agency problems in relation to external investors?Purpose: The purpose of the essay is to explain how entrepreneurs who take in external equity capital but remain the main owner experience agency problems in relation to external investors and how the problems are handledMethodology: In order to answer the questions and thereby achieve the purpose of the essay, the authors have applied an abductive approach. For data collection, the authors have conducted a qualitative research study with interviews for the empirical evidence. With the help of the study's analysismethod, it has been possible to determine how agent problems are perceived and handled from the entrepreneurs' perspectiveConclusion: The conclusion describes how agent problems are experienced and handled from the entrepreneur's perspective. The results of the study show that the agency theory can be applied from an entrepreneur's perspective, but also that the study makes it clear that agency problems for an investor can be a type of handling agency problems for an entrepreneur.Keywords: Entrepreneur, venture capitalists and agency problems. / Titel: Agentproblem ur entreprenörens perspektivEn studie om hur entreprenörer upplever och hanterar agentproblem irelation med riskkapitalister.Nivå: Magisteruppsats i Företagsekonomi, 15 hpUppsatsskrivare: Khalil Alsaid & Aldin HuskanovicHandledare: Jonas GabrielssonExaminator: Per Ola UlvenbladDatum: 2023-05-23Problemformulering: Hur upplever och hanterar entreprenörenagentproblem i relation med externa investerare?Syfte: Syftet med uppsatsen är att förklara hur entreprenörer som tar in externtägarkapital men förblir huvudägare upplever agentproblem i relation medexterna investerare samt hur problemen hanterasMetod: För att besvara frågeställningarna och därmed uppnå syftet meduppsatsen har författarna tillämpat en abduktiv ansats. För datainsamling harförfattarna genomfört en kvalitativ forskningsstudie med intervjuer förempirin. Med hjälp av studiens analysmetod har man kunnat konstatera huragentproblem upplevs och hanteras från entreprenörers perspektivSlutsats: Slutsatsen beskriver hur agentproblem upplevs och hanteras frånentreprenörs perspektiv. Studiens resultat påvisar att agentteorin kanappliceras utifrån en entreprenörs perspektiv men även att studien tydliggöratt agentproblem för en investerare kan vara en typ av hantering avagentproblem för en entreprenör.

本研究透過不同股權結構來探討傳統代理問題與核心代理問題對於研發支出投入程度之影響。 本研究將具有金字塔結構或交叉持股結構之企業分類為股權集中之企業，而將不具有金字塔結構或交叉持股結構之企業分類為股權分散之企業。實證分析顯示，在股權分散情況下，傳統代理問題的降低有助於研發支出之提升。其中，董事長兼任總經理、經理人持股比率、董監事持股比率、大股東持股比率、法人持股比率及獨立董事席次比率皆對研發支出之投入有正相關影響。在股權集中情況下，核心代理問題的降低也有助於研發支出之投入。 此外，相較於股權分散之企業，股權集中之企業有著較高的研發支出投入，代表股權集中之企業較有辦法投入較多資源於研發支出上。而透過交乘項之實證分析後，發現相對於股權集中之企業，若股權分散之企業的傳統代理問題能降低，那麼會更有效地提高研發支出以提升企業經營績效。同理也得知，在相對於股權分散之企業，股權集中之企業之核心代理問題若能降低，那麼會更有效地提高研發支出以提升公司價值。 / Based on ownership structures, this study investigates the effects of type I and type II agency problem on R&D expenses for innovation investments. This study classifies both pyramid ownership structure and cross-holding ownership structure as ownership-concentrated structure while others ownership-dispersed structure. The empirical results indicate that under ownership-dispersed structure, the reduction in type I agency problems increases research and development (R&D) expenses in innovation investments. The ways that reduce type I agency problem and boost innovation investments include CEO duality, executive ownership, corporate ownership, block ownership, institutional ownership, and the percentage of board seats held by independent directors. Under the case of ownership-concentrated structure, reduction in type II agency problems lead to increase in R&D expenses for innovation investments. Moreover, comparing with ownership dispersed firms, the ownership concentrated firms spend more in R&D expenses. However, if the dispersed ownership firms can decrease type I agency problems then they spend more in R&D relative to the ownership concentrated firms. By the same token, comparing with ownership-dispersed firms, the reduction in type II agency problems of ownership-concentrated firms will more effectively increase R&D expenses to raise the company value.