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This thesis explores three important topics spanning international asset pricing, empirical capital structure, U.S. politics, and corporate law: relationship-specific investment (RSI), contracting environment and financial performance; RSI, contracting environment and the choice of capital structure; and political value and SEC enforcement actions. Firms that engage in long-term bilateral relationships with their buyers or suppliers are usually required to make relationship-specific investments. We examine how the values of these long-term specific investments are affected by the quality of governmental contract enforcement. We find that firms in relationship-specific industries have higher valuations, measured by Tobin’s Q, when their countries of origin are able to strongly enforce contractual agreements. Our finding is robust to a variety of empirical specifications and regression methods. We also show that as legal quality improves, firms with relationship-specific investments exhibit lower operating performance, presumably due to risk or in order to motivate further investments from their stakeholders. Further analysis of the cross-section of stock returns supports a risk-based explanation. Firms in long-term bilateral relationships with their customers or suppliers are required to make relationship-specific investments in the form of physical equipment, human resources, specific production sites, or brand names. These dedicated assets are usually tied to a particular use or relationship and cannot be redeployed if the firm is liquidated. In the absence of legal enforcement, firms are required to limit their use of debt financing and, consequently, signal a reduced default risk to encourage investment by their contracting parties. Using a sample of 143,278 firm-year observations, and measures of industry-level relationship-specificity and the quality of legal enforcement across 57 countries, we find strong evidence that good quality contract enforcement mitigates the negative association between relationship-specificity and debt financing. The Securities and Exchange Commission (SEC) plays a central role in investigating potential violations of securities laws and initiating enforcement actions in the United States. We examine the association between political culture and political connections and the penalties imposed at the end of SEC enforcement actions. Our analysis is based on two key ideas. First, the political culture of a firm indicates its ethical boundaries and explains the propensity of misconduct across different domains, such as securities laws. Second, political connections signal a firm’s willingness to challenge SEC’s enforcement decisions. We find that the individual defendants associated with Republican firms are less likely to receive a bar or suspension penalty. This finding supports the notion that Republican managers are less likely to commit securities fraud since the Republican ideology stresses market discipline. Moreover, in line with prior research, our results show that political connections and firm size, as a proxy for bargaining power, also reduce penalties imposed in SEC enforcement actions. / Thesis / Doctor of Philosophy (PhD)

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In Chapter 1, I describe the hospice industry in California and highlight the key institutional details, then estimate a structural model of hospice choice by patients. Hospices are firms that give palliative care to dying patients. There is no price competition because Medicare pays hospices a fixed per-day rate for each patient, so hospices compete on reputation. I define a hospice's reputation as a stock of its past quality choices. Thus, a hospice can build up its reputation stock over time by consistently choosing high quality. The reputation stock also partially depreciates every period, meaning that a hospice which repeatedly shirks on quality will lose its reputation over time. To study reputation and hospice choice in this setting, I build and estimate a demand model of hospices using yearly hospice-level data from California for 2002-2018. Each consumer makes a discrete choice from a set of hospices in her market, taking into account hospices' reputations and characteristics. The demand estimates show that reputation plays a significant role in consumer choice and depreciates at an annual rate of 53%. In Chapter 2, I build a dynamic oligopoly model of hospices choosing quality to compete on reputation against rivals. This is used to recover the hospice cost function. I use my model and estimates to conduct the following policy counterfactuals. As reputation becomes more persistent - for instance, through the creation of an online hospice rating system - hospices choose higher quality. Hospices also choose higher quality as Medicare prices increase, but the response depends on how differentiated they are in characteristics from rivals. Finally, a hybrid per-day per-visit hospice reimbursement scheme achieves the same quality with nearly 30% lower spending than the current per-day Medicare scheme. In Chapter 3 (joint work with Rena Conti), we study market dynamics in the pharmaceutical industry after loss of market exclusivity by a branded drug. Branded drug manufacturers often respond to generic entry by releasing an Authorized Generic (AG), which is chemically identical to the branded drug but without the brand label attached. This is used to price discriminate between consumers, with the branded drug charging high price and AG charging low price to compete with generics. Using total drug sales and revenue data on US for 2004-2016, we build a stylized structural model to study entry and pricing decisions. We estimate a random-coefficients discrete choice demand model and find significant heterogeneity in brand valuation and price sensitivity among consumers. Then we build a dynamic structural model of generic entry, AG release, and pricing. Combined with calibrated entry-cost parameters, this is used to conduct policy counterfactuals. First, we study the impact of various demand-side policies (such as improving consumer valuation of non-branded drugs and increasing price-sensitivity) on market outcomes. Second, we show that a faster generic approval rate leads to greater generic entry, lower likelihood of AG being released, and lower prices. Third, we find that banning AGs leads to greater generic entry but also higher industry prices overall.

This study surveys the theoretical literature dealing with the behavior of technology suppliers in the presence of network externalities with a focus on economies of compatibility setting and promotional pricing. Positive network externalities arise when a good is more valuable to a user because more users adopt the same good or compatible ones. There are two issues with network externalities: demand side and supply side. This paper focuses on the supply side, and it relates the way that technologies are chosen and promoted. On the supply side, product compatibility choice, technology sponsorship, penetration pricing, and product pre-announcement are the competing strategies of firms operating in a market with network externalities. Among these strategies, compatibility choice decisions and promotional pricing are presented in the two different subsections, which follows. / Master of Arts

This thesis develops and demonstrates a methodology for formulating a link between physical efficiency, economic efficiency, and organizational efficiency, and then uses the link developed earlier for justifying capital expenditures. Two scenarios have been used to demonstrate the methodology in two phases. The first phase deals with the formulation of the link between physical efficiency, economic efficiency, and organizational efficiency. The second phase uses the methodology developed in phase one to perform a multi-period analysis. This multi-period analysis shows that an increase in the efficiency of the physical environment results in an increase in the efficiency of the economic environment for two hypothetical companies. The increase in the efficiency of the economic environment results in increased profits, which are a necessary but not sufficient condition for the existence of the organization. The increase in profits further leads to satisfaction of individual wants for four classes of contributors to the organization, and, thus, to an increase in the overall efficiency of the organizational process. / Master of Science

Traditionally, organizational commitment has been proposed as an important factor leading to desired behavioral consequences (Angle and Perry, 1981). Organizationally-committed individuals remain in an organization, perform reliably, and are even willing to make contributions to an organization's operation which go beyond what is expected of them (Schein, l980; Steers, 1977). One company that seems to rely heavily on the organizational commitment or its participants is Amway Corporation. Amway Corporation is a multi-level direct sales company that specializes in personal and home care products. In just 25 years it has grown from a low-budget company serving a regional market into a multimillion dollar corporation with markets in over 45 countries and territories and approximately one million distributors. Although some of Amway's remarkable organizational success must be attributed to product quality and its dynamic and inclusive recruitment policy, it seems possible that much of Amway's success must be traced back to the organizational commitment of its distributors. Amway Corporation attempts to enhance distributor commitment to the organization by providing material and non-material incentives, thereby promoting what Weber ( t 978) referred to as instrumental and value-rational, as well as affective forms of social action. The present study focused on the following research questions: What is the relationship between organizational commitment and successful Amway distributor task performance? What effect does the nature of distributor's organizational involvement have on the relationship between organizational commitment and distributor success? What role docs emotional attachment to Amway play in promoting successful distributor task performance? These different types of social action suggest different types of organizational involvement that might be exhibited by individuals in a complex organization. Based largely on the theoretical work of Etzioni (1961, 1975), and Clark and Wilson (1975), organizational involvement is conceptualized in the present study as the importance or material, purposive, and solidary incentives for distributor's continuing participation in Amway, and may be distinguished into two types: calculative and moral. Based on data collected on 121 Amway distributors, using two separate samples, this study found that there is a positive relationship between organizational commitment and distributor success. It was also found that organizational involvement and commitment are highly related. The hypothesis proposing that combining calculative and moral involvement greatly enhances the relationship between organizational commitment and overall distributor success was not supported. Calculative involvement and organizational commitment were found to have an interactive effect on overall distributor success. It was found that various time-use factors, such as number of months respondents had been in Amway, number of hours spent weekly motivating downline distributors, and the number of hours spent weekly selling products were also related to overall distributor success. The total number of hours spent weekly on Amway-related activities, and the number of hours spent weekly showing the Amway Sales and Marketing Plan were not significantly related to overall distributor success. / Ph. D.

by Fung Kin-piu, Ernest, Wong Yun-tak, Ted. / Thesis (M.B.A.)--Chinese University of Hong Kong, 1990. / Bibliography: leaf 40. / ABSTRACT --- p.ii / TABLE OF CONTENTS --- p.iii / LIST OF TABLES --- p.iv / PREFACE --- p.v / Chapter I. --- INTRODUCTION --- p.1 / Literature Review --- p.2 / Early and Late Market Entry Decisions --- p.5 / The Hong Kong Situation --- p.5 / Chapter II. --- RESEARCH METHODOLOGY --- p.7 / Statement of Objectives --- p.7 / Research Design --- p.7 / Data Collection Method --- p.9 / Sampling --- p.10 / Chapter III. --- DATA ANALYSIS --- p.12 / Method of Analysis --- p.12 / Results --- p.14 / Distribution of Relative Weights in the sample --- p.14 / Result for H1 --- p.15 / Result for H2 --- p.15 / Result for H3 --- p.17 / Chapter IV. --- LIMITATIONS --- p.18 / Biases in Design Process --- p.18 / Biases in Data Collection --- p.19 / Biases in Data Analysis --- p.20 / Chapter V. --- CONCLUSIONS AND DISCUSSION --- p.23 / Identification of Entry Barriers --- p.23 / Importance of Market Entry Barriers --- p.23 / Managerial Implications --- p.24 / APPENDIX --- p.28 / BIBLIOGRAPHY --- p.40