This dissertation consists of two empirical essays. The first chapter titled: “Hedge Fund Activism and Dual Ownership of U.S. Multinationals”. Harford, Wang & Zhang (2017) conclude that holding high cash balances abroad to avoid US taxes causes internal capital markets and investments distortions. We posit that hedge funds target MNCs with more severe internal capital and agency problems. We demonstrate that upon acquiring dual ownership in these firms, hedge funds reduce internal capital problems and improve investment, especially innovation, efficiencies. To further reduce agency costs of foreign cash holdings, hedge funds engage dual firms in focused acquisitions. These improvements are reflected in superior performances of dual firms relative to non-dual firms. Chapter 2 titled as “Innovation Strategies & IPO Underpricing”. In this chapter, we investigate how a firms’ choice of pre-IPO innovation strategies affect IPO pricing. We differentiate the orientation of the issuing firm’s innovation portfolio in terms of exploitative orientation versus explorative orientation based on citations of patents across technology classes. We introduce a measure of innovation power to generate breakthrough innovations. We show that the issuing firms with greater innovation power, especially firms with exploratory orientation of a patent, significantly decrease underpricing and have the power to bargain a higher offer price. Our results suggest that a higher exploration strategy requires more time to negotiate a higher offer price while more valuable innovation requires less time to bargain at the higher offer price.

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This thesis contain three chapters. Default Risk in Corporate Bond Pricing. This chapter provides a model for how the corporate bond default risk influences the systematic risk and an empirical analysis of the systematic and idiosyncratic parts of U.S. corporate bond returns during 2001-2005. The average corporate bond beta is low and positive (0.06). Investment grade bonds have negative betas (between - 0.01 and -0.13) and non-investment grade bonds have positive betas (between 0.11 and 1.48), but both groups have similar within groups systematic risks. When controls for interest rate and liquidity risks are introduced there are still remaining default probabilities, implying that the default risk is in part systematic and in part idiosyncratic.   Returns to Defaulted Corporate Bonds.   In the second chapter short term excess returns in a sample of 279 defaulted US corporate bonds are tested for using multiple regression analysis. There are robust excess returns after controlling for market and liquidity risk. The expected recovery rate during 2001-2006 is estimated to be, on average, four percentage points lower the first month after default than the present value of the recovery rate after nine months. Capital Structure Choices.   The trade-off and pecking order theories are tested using both established tests from the literature and new tests. The main contributions of this chapter are the new tests of financing of operating net assets (for the pecking order theory), the mean reversion tests (for the trade-off theory) and the test of mean reversion and trends. These tests allow for extended conclusions on the validity of the pecking order versus the tradeoff theory. / <p>Diss. Stockholm : Handelshögskolan, 2008 Sammanfattning jämte 3 uppsatser</p>

The paper explores the driving forces behind corporate cash holdings by analyzing past literature and extending this research to the behavior of firms after the 2008 recession. I look at the cash to assets and net debt to assets ratios from October 1980 to October 2011 to obtain an understanding of the past and current state of cash holdings. A comprehensive literature review is done on agency costs and transactional motives to give the reader an overview of the costs and benefits of holding cash. This provides the foundation for the precautionary motives for companies today to keep cash as a risk management tool.

This thesis further investigates the effectiveness of 15 variable moving average strategies that mimic the trading rules used in the study by Brock, Lakonishok, and LeBaron (1992). Instead of applying these strategies to developed markets, unique characteristics of emerging markets offer opportunity to investors that warrant further research. Before transaction costs, all 15 variable moving average strategies outperform the naïve benchmark strategy of buying and holding different emerging market ETF's over the volatile period of 858 trading days. However, the variable moving averages perform poorly in the "bubble" market cycle. In fact, sell signals become more unprofitable than buy signals are profitable. Furthermore, variations of 4 of 5 variable moving average strategies demonstrate significant prospects of returning consistent abnormal returns after adjusting for transaction costs and risk.

Background: The value of stock recommendations have been debated for a century andthe debate has escalated since Alfred Cowles (1933) published his research in “Can StockMarket Forecasters Forecast”? As of late, savings in stocks has increased and the householdsare managing their savings more actively. The consequence of the increased interestin stocks has resulted in a growing market for stock recommendations. Not just financialmedia but daily newspapers have embraced this new found interest, hence stock recom-mendations can be found in almost all large newspapers in Sweden. Furthermore, this phe-nomenon has also lead to intensified research within stock recommendations. Researchers have under the 20th and 21st century investigated a wide number of issues concerning stock recommendations. The most common issue with different angles has been whether stockrecommendations generate abnormal returns or not? Earlier research on this issue havehowever mostly been based on the American stock market. According to us, not enoughnational research has been done on whether stock recommendations generate abnormal returnsor not on the Swedish stock market. Further we think that there is a lack of research with regards to a short time span. Purpose: The purpose of the study is to investigate whether stock recommendations on Nasdaq OMXSLarge-Mid-Small CAP, First North and Aktietorget generate abnormal returns? Central for the study is to investigate if stock recommendation generates abnormal returns in the short-term. Secondary the study will also investigate stock recommendations effect on stock prices in the long run. Method: First step was to create databases from high frequency data, 10 minute OHLCVbars, and from closing prices. Thereafter use these as a base for statistical calculations. Conclusion: The results from this study show that analysts have succeeded with generat-ing significant abnormal returns with their recommendations. Above all it is the business journals buy recommendations that generate the highest abnormal return. Sell recommen-dations didn’t give high significant results in our measurements. Our results also show thatabnormal returns from buy recommendations are sufficiently high and the transaction costsare sufficiently low so that investors can capitalize on the analyses. We found that buy recommendations effect companies noted on Small Cap etc to a higher extent than companies noted on Large- and Mid-Cap because of the lower degree of transparency in the smaller companies. Our results also indicate that the weekly magazines generate approximatelyequal abnormal returns. The monthly generates the lowest abnormal returns in our study. In our research we also found that buy recommendations that are published when thestock market has a positive momentum perform better than when the stock market has anegative momentum. We also found that investor should closely monitor the information flow before the recommendation is published, since a positive information flow can have afavorable outcome on the size of the abnormal return. Last but not least, we observe a correlationbetween the numbers of investors the recommendation reaches and the magnitudeof the observed abnormal return. / Bakgrund: Värdet av aktierekommendationer har debatterats i snart ett sekel, och debat-ten har eskalerat ända sedan Alfred Cowles (1933) publicerade sin forskning ”Can StockMarket Forecasters Forecast?" De senaste åren har sparandet i aktier ökat och hushållenblir allt aktivare i sitt pensionssparande. Konsekvensen av det ökade intresset för sparande iaktier har resulterat i en växande marknad för aktierekommendationer. Inte bara finansiellmedia utan också dagliga tidskrifter har tagit till sig detta ökade intresse och nästan samtligastörre dagstidningar publicerar numera aktierekommendationer. Vidare har detta fenomen också lett till att forskningen kring aktierekommendationer intensifierats de senaste decennierna.Forskare har under 1900-talet och 2000-talet undersökt en mängd olika problem-ställningar kring aktierekommendationer. Varav den vanligaste problemställningen med varierandevinklar, har varit huruvida aktierekommendationer genererar överavkastning ellerej? Tidigare forskning har dock framförallt baserats på den amerikanska aktiemarknaden. I vår mening råder det brist på nationell forskning som visar huruvida aktierekommendatio-ner genererar överavkastning på bolag noterade på svenska marknadsplatser. Vidare råderdet brist på forskning som tar hänsyn till det korta tidsperspektivet. Syfte: Syftet med studien är att undersöka huruvida aktierekommendationer på Nasdaq OMXS Large-Mid-Small CAP och First North samt Aktietorget genererar överavkastning? Centralt för studien är attundersöka om aktierekommendationer är kursdrivande på kort sikt, Sekundärt kommer också studienundersöka aktierekommendationers inverkan på aktiekurser på lång sikt. Metod: Första steget var att konstruera databaser från högfrekvensdata, 10M OHLCVbars, och stängningskurser. Därefter använda dessa som grund för statistiska beräkningar. Slutsats: Resultat från vår studie visar att ekonomijournalister har lyckats med att genererasignifikant överavkastning med deras rekommendationer. Framför allt är det affärstidskrifternasköprekommendationer som genererar högst överavkastning. Säljrekommendationergav ett lägre signifikant utslag i våra mätningar. Våra resultat indikerar också på att överavkastningen från köprekommendationer är tillräckligt hög och transaktionskostnaderna tillräckligtlåga för att investerare skall kunna kapitalisera på rekommendationerna. Vi finneratt köprekommendationer är mer kursdrivande på Small Cap etc. än bolag noterade på Lar-ge- och Mid Cap på grund av den lägre graden av transparens i de mindre bolagen. Våra resultatpekar också på att Affärsvärlden, Börsveckan &amp; Veckans affärer genererar ungefärlika stor överavkastning. Aktiespararen &amp; Privata Affärer genererar den lägsta överavkastningeni våra mätningar. I våra efterforskningar ser vi också en stark tendens för att aktiersom rekommenderas när börsen har ett positivt momentum presterar bättre än aktier somrekommenderas när börsen har ett negativt momentum. Vi finner också att investerare börbeakta informationsflödet innan rekommendationstidpunkten då ett positivt informations-flöde kan får en gynnsam effekt på överavkastningens storlek. Sist men inte minst observe-rar vi en korrelation mellan antalet investerare rekommendationen når och magnituden påden observerade överavkastningen.

When a company sells shares of their business to the public for the first time, it is called an Initial Public Offering, IPO. The IPO is usually conducted by the issuing firm to raise capital for their future growth. Before the IPO the information about the issuing company is often limited and the investment in an IPO is associated with risks. The investors who choose to invest in an IPO are therefore usually compensated with a discount on the shares and often experience a first day positive return. This first day positive return is the definition of underpricing. If the majority of the IPOs are underpriced it should be of interest for an investor to take part of this opportunity and use it as an investment strategy. This thesis investigates if there is a way to predict which IPOs that will generate a positive first day return based on the information in the IPO prospect. / En IPO är det första erbjudandet av företagets aktier till den publika marknaden. En IPO genomförs ofta i samband med att företaget behöver ta in nytt kapital för framtida investeringar. Innan ett företag blir publikt är informationsinsynen begränsad vilket medför en risk för den som vill investera i det initiala erbjudandet. Investerarna som väljer att investera i erbjudandet är ofta kompenserade med en rabatt på aktierna och får då ofta en positiv avkastning på första handelsdagen. Denna initiala avkastning definieras som underprissättningen av erbjudandet. Om en majoritet av börsnoteringarna är underprissatta skulle det vara av stort intresse för investerare att upprepande investera i IPOs och ha detta som investeringsstrategi. Den här uppsatsen undersöker om det går att förutspå vilka IPOs som genererar en positiv avkastning första handelsdagen baserat på den informationen som finns att tillgå i IPO prospektet. / Civilekonom-uppsats

While the importance of venture capital (VC) can be highlighted by policy goals outlined in the 'Lisbon agenda', the European VC industry remains nascent in comparison to the more sophisticated VC market in the US. Researchers have identified key determinants that foster VC success on a broad level, and have often identified syndication as an important factor of success. This paper seeks to understand the role of syndication on the VC-backed company's success. I take a novel departure from past research in this area in three ways 1) I measure performance from the perspective of the portfolio company, rather than the VC firm which invests in the company 2) I isolate syndication in the first financing round and 3) I utilize a logistical model as well as a simultaneous equation model for which I introduce an instrumental variable. I gather VC data for both Europe and the US from the VentureXpert database to test various hypotheses regarding syndication. The results are significant and provide evidence to support that syndication in the first financing round is associated with greater success in achieving IPO exit in both regions. This should encourage VC firms, VC-backed companies, and policymakers to increase the practice of VC syndication in early financing rounds, thereby providing access to greater long-term growth opportunities. This paper adds to the existing, but limited, literature base on cross-region venture capital syndication.

This paper focuses on the problem of collapsed “stay in the market” (SIM) beliefs during financial crises. The primary purpose of this investigation was to ascertain whether or not inoculation messages represent a viable communication strategy to preemptively protect SIM beliefs during forthcoming financial crises. Ancillary purposes of this study were to further investigate the role of print and video crises, explicit instructions regarding post-inoculation talk (PIT), and gain and loss frame inoculation messages on the inoculation process. This study used a between subjects factorial design (3 x 2 plus four additional conditions) to explore ten hypotheses. Data collected from 513 participants were analyzed using multivariate and univariate tests and planned comparisons. The results of this investigation indicate that inoculation messages can serve as a viable preemptive crisis communication strategy, that inoculation can protect beliefs equally well when the crisis message is presented through video or print, and that employing a loss frame can strengthen the inoculation process. Mixed results regarding PIT call for further research. Research and practical implications, as well as limitations, are discussed.

Följande uppsats undersöker hur svensk utbetalningspolitik har utvecklats under åren 1992-2012. Urvalet består av de företag som under våren 2014 var noterade på Stockholmsbörsens “Large”, “Mid” eller “Small Cap” lista. Återköpens andel av den totala utbetalningsandelen visar sig inte vara lika hög som andra internationella studier har visat. Det är istället utdelningarna som utgör merparten av de totala utbetalningarna. Däremot så har andelen företag som enbart delar ut minskat trots att utdelningarna ökat, vilket också styrks av resultat från tidigare studier. Lägre nettoresultat under finanskrisen följs av minskade utbetalningar under 2008-2009. Återköpen minskar under denna period markant till att i stort sätt utebli, vilket bekräftar tidigare studier. / This paper provides evidence on Swedish payout policy during the past 20 years (1992-2012). The sample data consists of companies that were listed on Stockholm Stock Exchange (SSE) “Large”, “Mid” or “Small Cap” list during spring 2014. We show that repurchases of shares still represents a small proportion of the total payout, which contradicts results from other international studies. The dividends therefore still constitute the bulk of the total payments. We document a drop in net income during the financial crisis followed by reduced payments during 2008-2009. Repurchases decrease significantly during this period to virtually absent; confirming previous studies that argue that repurchases are a more flexible payout method than dividends.