My dissertation consists of three chapters that explore various aspects of corporate finance with a focus on issues related to corporate governance. Chapter 1 investigates how CEO bargaining power affects the level of CEO compensation. Contracting theories predict that CEO power plays an essential role in the pay-setting process. I provide causal empirical evidence of how changes in the bargaining power of CEOs affect the level of CEO compensation. Using the staggered adoption of the Inevitable Disclosure Doctrine (IDD) by US state courts as an exogenous shock to CEOs’ bargaining power, I find that the recognition of the IDD results in significantly lower levels of CEO compensation. The effect is present only in subsamples of firms whose CEOs experience a substantial decline in their bargaining power. These results support the idea that bargaining power is the channel through which the IDD recognition decreases CEO compensation. Economic impact of the IDD is also substantial in the subsamples, ranging from 16.4% to 20.5% decline in total compensation. Examination of the structure of compensation reveals that changes in the bargaining power of CEOs reduce total current compensation and option awards. The recognition of the IDD also increases turnover-performance sensitivity and shareholder wealth. Chapter 2 examines the impact of corporate religious culture on CEO compensation structure. Recent studies document the effect of corporate culture on corporate behavior. This study examines how a firm’s religious culture affects the structure of CEO compensation. Using county-level religiosity as a proxy for a firm’s culture, I find that firms in highly religious counties use about 12.4% less performance-based compensation in their CEO compensation packages. I consider two characteristics of religious cultures that are likely to have implications on executive compensation: extrinsic motivation and locus of control. To determine which characteristic is driving the results, I examine how turnover decisions differ depending on religious culture of firms. If locus of control – the extent to which human effort can affect future outcomes – is driving the main result, less turnover-performance sensitivity is expected in highly religious firms. The results show that turnover-performance sensitivity does not vary according to county-level religiosity, suggesting that locus of control is not the driver behind the main result. These findings indicate that firms with highly religious cultures use less performance-based compensation because religious cultures’ work ethic is less financially motivated. Lastly, Chapter 3 investigates how insider-dominance of corporate boards affect firm value. The agency literature posits that insider-dominated boards are likely to face severe agency problems. However, some theories on board control argue that insider-dominated boards are sometimes optimal for shareholders. I evaluate the theories using SOX-related board reforms in the early 2000s that presented an exogenous change in board control. Specifically, I analyze the heterogenous treatment effects based on firm characteristics that theoretically favor insider-dominated boards – firm size, proprietary knowledge, and information transparency. Preliminary results suggest that firms with theoretically optimal insider-dominated boards experienced a net increase in shareholder value when boards became independent. These results indicate that benefits of enhanced monitoring by independent boards outweighed any loss in value associated with insider control of the board. / Business Administration/Finance

Since the 1990s, the mergers and acquisitions (M&A) of commercial banks have been at a climax throughout the world, and the mode of M&A has been accepted by western countries, bringing new opportunities for the development of the banking industry. In a majority of the countries of the world, the banking industry is involved in a wave of economic M&A. Developed countries, such as the United States and those in Europe, have made significant gains through mergers and reorganizations of commercial banks, whetting the appetite of many developing countries’ commercial banks to become involved in such activities.In the 21st century, through the development of the world economy and the bank and its special position in this economy, its development model has attracted significant attention. Banks will struggle to maintain their profits as the global economy slows and credit risks increase. China’s interest rate liberalization is a major challenge that commercial banks are faced with, including the arduous task of smoothly adapting to the change. The banking industry contains countless bodies, and the business scope is homogenized. Moreover, fierce market competition constantly increases the management pressure in the banking industry. M&A activities have become the strategic choice of many banks. With the widening and deepening of the opening-up and competition degree of China's financial market, domestic banks are continuously penetrated by foreign capital and are facing great challenges, and the inherent desire of M&A is constantly presented. Compared with European and American commercial banks, the commercial banks in China are in a special situation: weak market competition, too much government intervention, more M&A aimed at preventing regional financial risks, and fewer M&A cases due to the requirements and motivations of commercial banks in the M&A activities. The growth mode of commercial banks includes an endogenous growth model of self-accumulation and a leapfrog growth mode of equity acquisition. Until now, western commercial banks have experienced five waves of M&A activity. The development and expansion of internationally active banks are usually inseparable from equity M&A. M&A activities have become important to international commercial banks seeking to realize leapfrog growth. After reforming, listing, and expanding its capital strength, China’s commercial banking industry is actively attempting to realize leapfrog growth through equity M&A. These banks are also gradually transitioning from an endogenous growth mode relying on internal accumulation to a growth mode valuing both endogenous growth and leapfrog development through and external M&A activities. This paper summarizes the rules of the development and expansion of foreign commercial banks through strategic M&A activity by using a systematic analysis of the five waves of international commercial banks’ M&A activity. This paper then puts forward the strategies of China’s commercial banks as related to strategic M&A activities. Taking the acquisition of Shenzhen Development Bank (hereinafter referred to as SDB) by Ping An Insurance (Group) Company of China (hereinafter referred to as "Ping An Group" or "Ping An") as an example, this paper summarizes the background, motivation and process of the M&A of both parties, and focuses on the analysis of synergies after the M&A. Through analysis, this paper finds that all indicators of the two companies have obvious synergies, and Ping An Group, the leading party, has been significantly improved in terms of operation, finance, corporate culture and management after merger and reorganization. To study the efficiency of M&A, this paper takes M&A of Wing Lung Bank by China Merchants Bank's as a case, and draws a conclusion and summarizes the suggestions of Chinese banks to improve the efficiency of merger and acquisition through empirical analysis, case study and other methods. Based on Ping An Group’s acquisition of SDB, this paper puts forward recommendations for the merger activity undertaken by China’s commercial banks at the end of the paper. These recommendations consider future M&A trends in China’s banking industry, the strategic choice related to future M&A activities, and the role of the government in mergers and reorganizations, particularly related to relevant policy formulations, regulatory coordination, the role that control plays, and so on. The objective of this paper is twofold. First, this paper analyzes the current competitive pattern of China’s commercial banking industry and at the same time studies the development process and M&A history of the American and overseas banking industry to demonstrate the M&A opportunities in China’s commercial banking industry. Second, this paper uses a case study to discuss the M&A strategy, synergistic effects, and M&A efficiency of Chinese commercial banks. Key Words: M&A strategy, Synergistic effect, M&A performance / Business Administration/Finance

In recent years, some TV series adapted from literary works, such as Ghost Blows Out Light the Light and Silent Separation, have become widely popular, making intellectual property (IP) one of the hottest areas of the surge of IP copyright investment. The “Internet Plus” era, supported by big data technology and the entertainment industry, especially film and television, is transforming production from a non-standardized to a standardized mode. Film and TV dramas based on online novels, their derivative products as games, anime, and so on are taking up an increasing share in the entertainment industry. This paper investigates the valuation of IP copyrights based on a dataset of film and television dramas. analyzes the creation law of film and television and develops a relatively accurate evaluation system for films and television dramas by using an integrated big data of various index, such as content, market potential, creation team, production team, and IP derivatives. Such a valuation model not only guides the production and creation of film and TV dramas to achieve standardization of IP production, but also helps price IP copyrights accurately, thereby promoting a healthy and efficient development of film and television dramas in the “Internet Plus” era. / Business Administration/Finance

My dissertation consists of three chapters where the common theme is the use of various econometric techniques to constructing optimal portfolios and empirically exploring portfolio performance. My first chapter proposes new approaches to constructing mimicking portfolios for non-tradable shocks from a large set of base assets. Although the analytical solution to mimicking portfolios is available, it involves estimating the covariance of asset returns and covariance of returns with replicated shocks. The estimates of those moments are noisy and can have a detrimental impact on the quality of the portfolio performance out of sample, especially in the presence of a large number of base assets. To mitigate the overfitting problem, this chapter imposes regularization constraints on portfolio strategies. The first proposed approach solves the portfolio variance minimization problem with target portfolio betas and a constraint on the upper limit on the norm of portfolio weights. The second approach recasts the mimicking portfolio problem to a GMM estimation problem, where the portfolio weights are the estimated parameters, along with constraints on the norm of the portfolio weights. Compared with the first approach, the second approach does not estimate the portfolio problem inputs explicitly and may not satisfy the beta constraints in-sample, leading to additional flexibility to better perform out-of-sample. This chapter uses simulations to study the comparative advantage of the two approaches, applies the proposed techniques to construct mimicking portfolios for nine macroeconomic and uncertainty shocks, and examines the empirical out-of-sample portfolio performance. In all cases, the regularized mimicking portfolios have feasible portfolio weights without sacrificing the portfolio performance. In my second chapter, I propose a new methodology to form conditional mimicking portfolios. Prior research forms mimicking portfolios mostly based on past realizations of returns and shocks without utilizing conditioning information, which would capture the time variation in statistical moments of returns and shocks.My conditional mimicking portfolios track the target shocks period by period, efficiently use available information about future shocks and returns, and have a minimal conditional variance of returns. The key innovation of my methodology is that I transform the traditional conditional portfolio minimization problem into a set of conditional moment restrictions and apply the optimal Generalized Method of Moments (GMM) estimator to find portfolio weights. To obtain the optimal GMM estimator, I build upon the classical GMM framework and construct the optimal instruments, which are non-parametrically functions of asset characteristics and macroeconomic variables. Compared with the traditional approach, my methodology neither imposes assumptions on the dynamics of conditional returns and shocks nor struggles to identify unobservable investors' information sets. To exploit the finite sample property of conditional mimicking portfolios, I use simulations and apply my methodology to create portfolios that mimic six macroeconomic and uncertainty shocks. Results show that the use of conditioning information helps improve the out-of-sample portfolio performance and also highlight the challenges of forming conditional mimicking portfolios. In my third chapter, I study portfolio management, with a focus on mutual fund performance. Prior research primarily examines the performance of equity mutual funds, leaving bond mutual funds relatively understudied. In this chapter, I construct a holding-based measure, weight shift, to capture the intensity of bond mutual funds' trading activity. The traditional measure of funds' trading activity - portfolio turnover - has several limitations, such as infrequent reporting, sensitivity to large changes in average total net assets, and susceptibility to the amount of one-sided aggregate transactions. I investigate the relationship between funds' trading activity and future fund performance, and find that higher fund trading activity predicts lower fund performance controlling for fund-specific characteristics. The negative impact of trading activity on fund performance is stronger among high-yield funds, in line with the notion that more noise trading incurred by high trading in illiquid markets erodes fund performance. I also examine the incentive for managers to engage in intensive trading activity, and find that managers use high trading intensity as a signal to attract investors, especially retail investors. Finally, I find that weight shift captures the inferior managerial skill and reacts to macro uncertainty. This chapter sheds light on understanding the trading behavior of bond mutual funds and questions the value of active management in bond mutual funds. / Business Administration/Finance

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My dissertation studies the potential for the increased importance of Environmental, Social, and Governance (ESG) information for corporations and investors in the U.S. market. In my first essay, I examine the effect of coverage by ESG rating agencies on firm ESG performance and disclosure policy. To control for the selection in coverage, I construct a sample of firms with existing ESG ratings from some agencies and study the marginal effect of an additional coverage on a firm relative to firms that did not receive the additional coverage. I find that when firm ESG coverage intensifies, its ESG ratings improve, its toxic emissions decline, and its board diversity increases. More covered firms disclose more ESG information and attract more institutional investors, especially institutions with revealed preferences for high-ESG stocks. The results suggest that ESG information providers exhibit material impact on firms. In my second essay, I examine the link between the diffusion of ESG practices in the mutual fund industry and the labor market of mutual fund portfolio managers. I find that portfolio managers are more likely to join funds with an ESG profile similar to the profile of their current fund. When the two profiles are mismatched, managers shift the ESG of their new fund in the direction of their past ESG record. The latter effect is stronger when the new managers are more experienced and represent a larger percentage of the management team. The effect is well pronounced for managers with revealed preferences for both high and low ESG stocks, and funds in both more and less ESG-friendly states. Managers with strong ESG records exhibit better fund performance over the year following the appointment. The results suggest that the labor market is an important factor in the propagation of ESG practices in the mutual fund industry.

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