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This paper tests whether politically connected firms in Putin’s Russia are a channel for the political business cycle. Given the widespread corruption and crony capitalism that exists in Russia, it is likely that federal and regional politicians may need to buy the electoral support of powerful, connected firms in order to win elections. Using panel data of approximately 60,000 Russian firms comprising an estimated 62 percent of GDP per year from 2003-2011, I find that federally connected firms are significantly more productive in federal election years. If these cycles in firm productivity are caused by electoral favors from politicians, this not only further corrupts Russia’s political landscape, but it also may induce powerful firms to engage in costly political bidding wars for these connections, thus inhibiting their productivity and the overall productivity of the Russian economy.

Market Liquidity, Active Investment, and Markets for Information. This paper studies a financial market in which investors choose among investment strategies that exploit information about different fundamentals. On the one hand, the presence of other informed investors generates illiquidity. On the other hand, investors who use different strategies can serve as quasi-noise traders for each other, thereby also supplying each other with liquidity. Thus, investment strategies can be substitutes or complements. Such externalities in information acquisition have effects on investor herding, comovement in prices and liquidity across assets, trade volume, and the informational role of prices. They further affect the relationship between financial markets and information markets. Information market competition fosters investor diversity, whereas monopoly power promotes investor herding. Also, in order to benefit from quasi-noise trading, a financial institution may engage in both proprietary trading and information sales. Security-Voting Structure and Bidder Screening. This paper shows that non-voting shares can promote takeovers. When the bidder has private information, shareholders may refuse to tender because they suspect to sell at an ex-post unfavourable price. The ensuing friction in the sale of cash flow rights can prevent an efficient sale of control. Separating cash flow and voting rights mitigates this externality, thereby facilitating takeovers. In fact, the fraction of non-voting shares can be used to discriminate between efficient and inefficient bidders. The optimal fraction decreases with managerial ability, implying an inverse relationship between firm value and non-voting shares. As non-voting shares increase control contestability, share reunification programs entrench managers of widely held firms, whereas dual-class recapitalizations can increase shareholder wealth. Signaling in Tender Offer Games. This paper examines whether a bidder can use the terms of the tender offer to signal the post-takeover security benefits to the shareholders of a widely held target firm. As atomistic shareholders extract all the gains in security benefits, signaling equilibria are subject to a constraint that is absent from bilateral trade models. The buyer (bidder) must enjoy gains from trade that are excluded from bargaining (private benefits), but can nonetheless be relinquished and enable shareholders to draw inference about the security benefits. Restricted bids and cash-equity offers do not satisfy these requirements. Dilution, debt financing, probabilistic takeover outcomes and toeholds are all viable signals because they make bidder gains depend on the security benefits in a predictable manner. In all the signaling equilibria, lower-valued types must forgo a larger fraction of their private benefits and these signaling costs prevent some takeovers. When the bidder has additional private information about the private benefits as in the case of two-dimensional bidder types, fully revealing equilibria cease to exist. This does not hold once bidders can offer not only cash or equity but also (more) elaborate contingent claims. Offers which include options avoid inefficiencies and implement the symmetric information outcome. Goldrush Dynamics of Private Equity. This paper presents a simple dynamic model of entry and exit in a private equity market with heterogeneous private equity firms, a depletable stock of target companies, and rational learning about investment profitability. The predictions of the model match a number of stylized facts: Aggregate fund activity follows waves with endogenous transitions from boom to bust. Supply and demand in the private equity market are inelastic, and the supply comoves with investment valuations. High industry performance precedes high entry, which in turn precedes low industry performance. There are persistent differences in fund performance across private equity firms, first-time funds underperform the industry, and first-time funds raised in booms are unlikely to be succeeded by a follow-on fund. Fund performance and fund size are positively correlated across firms, but negatively correlated across consecutive funds of a private equity firm. Finally, booms can make ”too much capital chase too few deals.” Reputable Friends as Watchdogs: Social Ties and Governance. To examine how governance is affected when a designated supervisor befriends the person to be supervised, this paper embeds a delegated monitoring problem in a social structure: the supervisor and the agent are friends, and the supervisor desires to be socially recognized for having integrity. Strengthening the friendship weakens the supervisor’s monitoring incentives, forging an alliance against the principal (bonding). But the agent also grows more reluctant to put the supervisor’s perceived integrity at risk, thus becoming more aligned with the principal (bridging). If the supervisor’s desire for social recognition is strong, the principal’s preferences regarding the supervisor-agent friendship are bipolar. Weak friendship makes the supervisor monitor intensively to save face. Strong friendship leads the supervisor to abandon monitoring but the agent to behave well in order to protect the supervisor from losing face. The strength of friendship necessary for the latter outcome decreases in the supervisor’s desire for esteem; that is, image concerns leverage the bridging effect of friendship. This suggests that overlapping personal and professional ties can enhance delegated governance in cultures or contexts where social recognition is important, and provides a novel perspective on issues related to crony capitalism, corporate governance, and organizational culture. / Diss. Stockholm : Handelshögskolan, 2009 Sammanfattning jämte 5 uppsatser

本研究透過台灣創投基金的聲譽、國際化和政治連結等信號(Signal)，探討創投基金對於新創公司初次公開發行後的長期表現的影響。本研究之實證結果發現，創投基金的聲譽越高以及國際化程度越高，對於新創公司的長期表現有正向影響，但是創投基金與國發基金的政治連結卻產生非單一面向的結果，政治連結僅對於新創公司的長期研發投入具有正面顯著影響。政治連結會帶來負向的效果可能由於國發基金所推行的政策影響，或者是其中具有裙帶資本主義的干擾，導致受到國發基金所投資的創投基金對於新創公司的長期表現帶來負面影響。由本研究的結果我們可知若新創公司得到具有高聲譽或國際化的創投投資是對於其未來發展是有所幫助，所以新創公司在尋找創投基金合作時，可以以此作為考量的標準。 / In this research, venture capital reputation, degrees of internationalization, and the political links formed by venture capitals and Taiwanese National Development Fund are hypothesized to influence the long-run performance of start-ups. By utilizing a unique dataset of venture capital investment, we could investigate the sources of higher long-run performance of venture capital teams. Besides, we also inquire the impact of internationalization and political links of venture capitals on the performance of stat-up business. The results show that venture capitals with higher reputation or degrees of internalization impacts positively on long-term performance of start-ups. However, the political links formed between venture capitals and Taiwanese National Development Fund only affects business innovation measures positively. The policy focused or the crony capitalism long existing between Taiwanese National Development Fund and venture capitals can both be the major reasons to trigger the mixed investment influence. Thus, this research can shed some light on the intrinsic factors driving positive investment results other than the venture capital reputations.