Thesis. 1979. Ph.D.--Massachusetts Institute of Technology. Alfred P. Sloan School of Management. / MICROFICHE COPY AVAILABLE IN ARCHIVES AND DEWEY. / Bibliography: leaves 271-278. / by Nicolas S. Majluf. / Ph.D.

Thesis. 1978. M.S.--Massachusetts Institute of Technology. Alfred P. Sloan School of Management. / MICROFICHE COPY AVAILABLE IN ARCHIVES AND DEWEY. / Includes bibliographical references. / M.S.

This dissertation introduces a new method for evaluating mergers and acquisitions (M&As) and goodwill allocations associated with them. This method differs from Generally Accepted Accounting Principles (GAAP), which estimate the sum of the fair value of net identifiable assets by focusing on balance sheet information, and recognizes the remainder of the purchase price as goodwill. The new method utilizes both balance sheet and income statement information to estimate the value of a target as a business, and treats the remainder of the purchase price as the uncertain growth expectation. Using the new approach, I document that uncertain growth expectations in M&A prices (1) are negatively related to acquirer's long-term returns, (2) predict future goodwill impairments, and (3) are superior to event-date market reactions and premiums as a predictor of acquirers' future performance.

This dissertation studies topics in the areas of empirical corporate finance, banking, and financial intermediation. In the first chapter, entitled Personal Relationships in Loan Renegotiation: Evidence from Corporate Loans, I estimate the effect of personal relationships between a loan officer and a firm on the probability to renegotiate a loan and the outcomes of the renegotiation. To identify this effect, I exploit a bank reorganization in Greece in the mid-2010s, which allows me to identify two types of firms: one, those whose personal relationships with loan officers were discontinued and those whose relationships were not. This paper’s main conclusion is that personal relationships mitigate the cost of distress for the firm in a loan renegotiation. The firm is worse off following the interruption of its loan officer relationship, as it is less able to renegotiate, and the firm also receives tougher loan terms on renegotiated loans. The insights from the second chapter, entitled Lending Relationships and Moral Hazard in Loan Renegotiation, can have important policy implications related to the rise of nonperforming loans (NPLs). Many banks operating in countries that were hit by the 2010 European debt crisis, faced a significant rise in NPLs. This rise became one of the main challenges that banks face, as high levels of NPLs tie up bank capital and thus reduce profitability and increase funding costs. In the second chapter, I provide empirical evidence that banks, through efficient renegotiation and strong relationships with firms, can prevent loan defaults. This analysis suggests that firms with more distant lending relatioships are more likely to strategically delay a loan payment in order to efficiently trigger a loan renegotiation. This strategic behavior gives rise to the moral hazard phenomenon. In the third chapter, entitled Securing the Unsecured: Do stronger creditor rights affect firms’ access to credit?, I seek to understand whether stronger creditor rights influence firms’ capital structure and access to finance. To answer this question, I use the passage of an enforcement on cash assets reform in Croatia that aimed to increase the collection of the unsecured debt. To identify exogenous variation across firms affected more by the reform versus those that were not, I use a novel dataset on courts’ efficiency in dealing with the specific type of cases affected by the reform. The conclusion of the paper is that firms maintain higher leverage and have easier access to credit when creditor rights are stronger. The firms that benefit the most are medium size and have limited access to tangible assets. When firms are able to borrow more, they invest more in fixed assets.

Choi Tsz Wang. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2004. / Includes bibliographical references (leaves 43-45). / Abstracts in English and Chinese. / Chapter 1 --- Introduction --- p.1 / Chapter 2 --- Review of Structural Models --- p.5 / Chapter 2.1 --- The Merton model --- p.5 / Chapter 2.2 --- The default barrier model of Black and Cox --- p.7 / Chapter 3 --- Estimating the Merton model --- p.10 / Chapter 3.1 --- The Variance Restriction (VR) method --- p.10 / Chapter 3.2 --- The Maximum Likelihood estimation (ML) method --- p.12 / Chapter 3.3 --- Comparison between VR and ML methods --- p.13 / Chapter 4 --- Implications of Using the Proxy in Default Barrier Estimation --- p.15 / Chapter 4.1 --- Rejection of SC framework --- p.16 / Chapter 4.2 --- Positive barrier implication --- p.17 / Chapter 4.3 --- Barier over debt implication --- p.17 / Chapter 4.4 --- Numerical illustration --- p.19 / Chapter 5 --- The Proposed Framework --- p.22 / Chapter 5.1 --- Maximum likelihood estimation --- p.23 / Chapter 5.2 --- Barrier-to-debt ratio specification --- p.25 / Chapter 5.3 --- Simulation checks --- p.26 / Chapter 5.4 --- Comments on the performance of α --- p.29 / Chapter 6 --- Estimation with Empirical Data --- p.33 / Chapter 6.1 --- Description of data --- p.33 / Chapter 6.2 --- Empirical results --- p.35 / Chapter 7 --- Conclusion --- p.41 / References --- p.43

This dissertation studies empirical corporate finance problems of regulations and monitoring. The dissertation is composed of three chapters. First, I study how firms deal with business regulations that limit their operations. In the first chapter I exploit a natural experiment in Argentina to show that the ownership structure of a firm affects its degree of compliance with regulations, with publicly listed firms complying more than privately held ones. In 2012 the Argentine government banned companies from transferring funds abroad from their domestic operations. Despite this limitation, companies trying to repatriate capital could still overprice products they import from their headquarters or affiliates. I find that after the regulation, private firms overprice imports by almost 10% and manage to repatriate up to 46% of the profits that would have otherwise remained locked in at the Argentine subsidiary. Listed companies do not exploit this mechanism, showing that listing status affects compliance. The second chapter studies whether the differential cost imposed on listed firms operating in emerging markets by these higher compliance rates is significant. The main empirical challenge is that the cost is firm-time-regulation specific, and, for that reason, it is empirically unfeasible to measure it. I take an alternative route and show that changes in the levels of market regulations impose compliance costs of such magnitude that they shape the patterns of M&A transactions. First, I show that after the regulation studied in Chapter 1, private firms acquired listed ones at an extraordinary pace, while listed firms stopped acquiring private ones. This evidence suggests that the regulation increased the cost of being public. Then, I show that this finding is not specific to the Argentine market but is common across emerging markets. I do so by analyzing the response of M&A transactions to changes in the regulatory intensity of each country. Finally, the third chapter, co-authored with Matthieu Chavaz, studies the effect of deposit insurance on market discipline in a close-to-ideal setting. We exploit the political relationship between the United Kingdom and its Crown Dependencies and use a novel dataset to test this effect. Tracking the price paid for thousands of deposit products between 2007 and 2015, we find that deposit insurance deters discipline. In addition, we provide the first direct test of the interaction between depositors’ attention, deposit insurance, and market discipline. We show that when attention increases, risky banks offer higher rates both to insured and uninsured depositors, but that the effect is stronger for uninsured depositors. These results suggest that discipline is imposed even in the presence of deposit insurance, but only when information becomes salient.

Hang, Zheng. / Thesis submitted in: October 2007. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2008. / Includes bibliographical references (leaves 122-131). / Abstracts in English and Chinese. / ABSTRACT --- p.2 / CHINESE ABSTRACT --- p.3 / ACKNOWLEDGMENTS --- p.4 / TABLE OF CONTENTS --- p.6 / LIST OF TABLES --- p.8 / LIST OF FIGURES --- p.9 / Chapter CHAPTER 1 --- INTRODUCTION --- p.10 / Chapter 1.1 --- Research Objectives --- p.10 / Chapter 1.2 --- China as the Strategic Research Site --- p.12 / Chapter 1.3 --- Organization of this Thesis --- p.15 / Chapter CHAPTER 2 --- LITERATURE REVIEW --- p.17 / Chapter 2.1 --- Classic Strategic Categories --- p.17 / Chapter 2.1.1 --- Generic Competitive Strategies --- p.17 / Chapter 2.1.2 --- Growth Vector --- p.19 / Chapter 2.1.3 --- Summary --- p.20 / Chapter 2.2 --- Disruptive Innovation Strategy --- p.20 / Chapter 2.2.1 --- Blue Ocean Strategy --- p.20 / Chapter 2.2.2 --- Disruptive Innovation --- p.22 / Chapter 2.2.3 --- Low-end encroachment --- p.29 / Chapter 2.2.4 --- Summary --- p.31 / Chapter 2.3 --- Diversification Strategy --- p.32 / Chapter 2.4 --- Developing Country Multinationals --- p.35 / Chapter 2.4.1 --- Latecomers' Strategy --- p.36 / Chapter 2.4.2 --- The Bottom of the Pyramid --- p.38 / Chapter 2.4.3 --- Market Structure in Developing Countries --- p.40 / Chapter 2.4.4 --- Country of Origin Effect --- p.41 / Chapter 2.4.5 --- Summary --- p.42 / Chapter 2.5 --- Chapter Summary --- p.43 / Chapter CHAPTER 3 --- THEORETICAL FRAMEWORK AND HYPOTHESES --- p.45 / Chapter 3.1 --- Theoretical Framework --- p.46 / Chapter 3.2 --- Hypotheses and Proposition --- p.49 / Chapter CHAPTER 4 --- METHODOLOGY --- p.55 / Chapter 4.1 --- Quantitative Methods --- p.55 / Chapter 4.2 --- Qualitative Methods --- p.62 / Chapter CHAPTER 5 --- RESULTS --- p.64 / Chapter 5.1 --- Quantitative Results --- p.64 / Chapter 5.1.1 --- Descriptive Statistics --- p.64 / Chapter 5.1.2. --- Tests of Hypotheses --- p.68 / Chapter 5.2 --- Qualitative Results --- p.72 / Chapter 5.2.1 --- Haier Group --- p.73 / Chapter 5.2.1 --- Galanz --- p.79 / Chapter 5.2.3 --- Geely --- p.83 / Chapter 5.2.4 --- Huawei --- p.89 / Chapter CHAPTER 6 --- DISCUSSION AND CONCLUSION --- p.95 / Chapter 6.1 --- Discussion --- p.95 / Chapter 6.2 --- Implications --- p.103 / Chapter 6.2.1 --- Implication for Theory --- p.103 / Chapter 6.2.2 --- Implication for Research --- p.105 / Chapter 6.2.3 --- Implication for Practice --- p.106 / Chapter 6.3 --- Limitations and Future Research --- p.118 / Chapter 6.4 --- Conclusion --- p.120 / REFERENCE --- p.122 / APPENDIX 1. LIST OF IDENTIFIED 60 COMPANIES --- p.132 / APPENDIX 2. STRATEGIES RATING SHEET --- p.134 / APPENDIX 3. COMPANY CODE --- p.155 / APPENDIX 4. STRATEGY RATINGS OF SAMPLE COMPANIES --- p.156

Ko, Iat Meng. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2008. / Includes bibliographical references (leaves 53-55). / Abstracts in English and Chinese. / Abstract --- p.i / Acknowledgement --- p.iii / Chapter 1 --- Introduction --- p.1 / Chapter 2 --- Research Method --- p.6 / Chapter 2.1 --- Corporate Real Estate Holding Measures --- p.6 / Chapter 2.2 --- Free Cash Flow Measure --- p.6 / Chapter 2.3 --- Corporate Governance Measures --- p.9 / Chapter 2.3.1 --- Outside Blockholder Ownership --- p.10 / Chapter 2.3.2 --- CEO Compensation --- p.10 / Chapter 2.4 --- Merger and Acquisition Effect --- p.11 / Chapter 2.5 --- The Endogeneity Problem of Acquisition --- p.13 / Chapter 3 --- The Data --- p.16 / Chapter 4 --- Empirical Results --- p.19 / Chapter 4.1 --- Free Cash Flow and Corporate Governance --- p.19 / Chapter 4.2 --- M&A Effect --- p.20 / Chapter 4.3 --- Self-Selection Correction --- p.21 / Chapter 4.3.1 --- Estimating the Probability of Acquisition´ؤ Probit Estimation --- p.22 / Chapter 4.3.2 --- Self-Selection Model --- p.23 / Chapter 4.4 --- Effects of Target Firms --- p.24 / Chapter 4.5 --- Changes in Profitability Around Acquisition --- p.25 / Chapter 4.6 --- Sub-samples --- p.26 / Chapter 4.6.1 --- Free Cash Flow and Corporate Governance --- p.27 / Chapter 4.6.2 --- M&A Effect --- p.28 / Chapter 4.6.3 --- Self-Selection Correction --- p.28 / Chapter 4.6.4 --- Effects of Target Firms --- p.29 / Chapter 4.6.5 --- Changes in Profitability Around Acquisition --- p.29 / Chapter 5 --- Conclusion --- p.51 / Bibliography --- p.53

Yang, Bin. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2007. / Includes bibliographical references (leaves 60-63). / Abstracts in English and Chinese. / Acknowledgements --- p.iv / Chapter 1. --- Introduction --- p.1 / Chapter 2. --- Literature Review and Some Discussions --- p.6 / Chapter 3. --- Measuring Corporate Governance --- p.11 / Chapter 3.1. --- Overview --- p.11 / Chapter 3.2. --- Ownership Concentration --- p.14 / Chapter 3.2.1. --- Overview --- p.14 / Chapter 3.2.2. --- Herfindahl Index --- p.15 / Chapter 3.2.3. --- Controlling Largest Shareholder's Ownership --- p.16 / Chapter 3.3. --- Check-and-balance of Ownership --- p.17 / Chapter 3.3.1. --- Overview --- p.17 / Chapter 3.3.2. --- Balance Index --- p.18 / Chapter 3.4. --- Controlling owner alone --- p.18 / Chapter 3.5. --- Separation of Cash Flow Rights and Control Rights --- p.19 / Chapter 3.6. --- Principal-Agent Problem between the largest shareholders and managers --- p.20 / Chapter 3.6.1. --- Duality --- p.20 / Chapter 3.6.2. --- Managerial Ownership..........................................................Error! Bookmark not defined / Chapter 3.7. --- Board Composition --- p.21 / Chapter 4. --- Measuring Public Governance --- p.23 / Chapter 5. --- Determinants of Real Estate Holdings --- p.27 / Chapter 6. --- Data and Empirical Methodology --- p.29 / Chapter 6.1. --- Data Summary --- p.29 / Chapter 6.2. --- Empirical Examination --- p.31 / Chapter 7. --- Statistics and Regression Results --- p.36 / Chapter 7.1. --- Summary Statistics --- p.36 / Chapter 7.2. --- Regression Result --- p.38 / Chapter 7.2.1. --- Univariate results and multivariate results of 22 countries in the Panel A --- p.38 / Chapter 7.2.2. --- Univariate results and multivariate results of 42 countries in the Panel B --- p.45 / Chapter 7.2.3. --- Univariate results and multivariate results of 13 Western European countries and 9 Eastern Asian countries --- p.47 / Chapter 7.2.4. --- Interaction Effects --- p.51 / Chapter 8. --- Robustness Check --- p.52 / Chapter 9. --- Conclusions --- p.58 / References --- p.60

Doctor of Philosophy (PhD) / Changing the behaviour of firms to take environmental concerns into account is seen as unlikely without effective regulations. However, corporations are increasingly keen to represent themselves as ‘green’, including those in the world’s largest manufacturing sector: the car industry. Given rising concern for the environment and environmental sustainability since the 1990s this thesis asks: what motivates car firms to actually make environmental commitments? Answering this question has implications for whether these commitments are ‘real’ and if so whether they are occurring in response to material factors (e.g. state regulations and consumer demand) versus normative factors (e.g. social attitudes and internal company strategies). In order to answer it, the thesis applies the insights of the institutional varieties of capitalism approach to the German, United States and Japanese car industries, and specific firms within them, in respect of the environmental issue of climate change from 1990 to 2004. Empirical national data is analysed, as well the environmental reporting of individual firms and interviews with key personnel. The main findings are that what leads the car industry to see environmental issues as central to their business interests hinges on the impact of differing national institutional factors. Specifically, it is a matter of whether firms have a liberal market economy (LME) as their home base, in the case of US firms, or a coordinated market economy (CME) as their home base, in the case of German and Japanese firms. US car firms react more to the material imperatives of consumer demand and state regulations. German and Japanese firms are more mindful of normative factors for their initiatives, such as social attitudes (especially for German firms) and internal company strategies (especially for Japanese firms). They have more of a partnership approach with government. Therefore, car firms have very distinct ‘lenses’ through which they see the environmental performance of the cars they produce. As such, the thesis concludes that the variety of capitalism of nations has implications not just for the type of products that economic actors such as car firms produce, and the competitive advantages they develop, but also the way they address related issues arising as a result of their activities, including environmental issues.