I investigate how the presence of outsiders in the senior management team is related to the financing decision of Chinese listed family firms. For a sample of listed family firms from 2008 to 2017, I find that family firms with more outsiders in their senior management team (including the CEO, vice general manager, CFO, secretary of the board of directors, and other persons specified in the articles of Association) have higher leverage and take on more debt. Further, from the aspect of different financing choices, my empirical analysis shows that family firms with a higher proportion of outsiders take on fewer bank loans but issue more bonds. I use the proportion of outsiders in the firm's senior management team to measure the presence of outsiders in family firms. Besides, for the robustness test, I also use two dummy variables to measure the presence of outsiders in family firms. One indicates whether the family members fully exit from the senior executive team (including board chair, CEO, and CFO), and the other indicates whether the family members fully exit from the senior management team (including CEO, vice general manager, CFO, secretary of the board of directors, and other persons specified in the articles of Association). The results are consistent. To deal with the potential endogeneity issues, I use the outsiders’ full control of the senior executive team of the family firms as an exogenous shock to conduct PSM-DID analysis, and the results still hold. To conduct a heterogeneity analysis, I investigate factors that could moderate the relation between the presence of outsiders and financing policy in family firms from the perspective of family firms’ expropriation risks. The results show that the positive relationship between the presence of outsiders and the issue of bonds are both more pronounced for family firms with a higher amount of related party transactions, and for family firms with higher other receivables. My study shows that the presence of outsiders in family firms has a significant impact on firms’ financing decisions. In specific, the presence of outsiders leads to significantly higher leverage in family firms, fewer bank loans, and a larger amount of bond issuance. Considering the superiority of bonds to bank loans in the issuance procedure, amount, maturity, and cost, the positive impact of the presence of outsiders on bond issuance indicates that outsiders help to alleviate family firms’ financing constraints and improve financing structure. In addition, the strengthening role of expropriation risks in the positive relation of the presence of outsiders and bonds issuance also provides some implication that the introduction of outsiders in family firms helps to improve family firms’ governance structure, alleviate the concerns of creditors, and thus reduce agency conflicts between family shareholders and creditors. / Business Administration/Finance

Chapter 1 novelly examines the nature of the interaction between private donors and not-for-profit organisations (NPOs) when NPOs can invest endowment funds in a two-asset risky portfolio and donors can contribute to both the endowment fund and the annual campaign. I study a three-stage non-cooperative game with two types of economic agents: a cohort of heterogeneous donors and one representative NPO. In equilibrium, donors always contribute to the endowment fund; however, they may not contribute to the annual campaign. The proportion of the NPO's endowment fund invested in the risky asset is a discontinuous function of the endowment; donors contribute less to an aggressive NPO and more to a cautious one. When the NPO can solicit donors to contribute only once, this increases the expected level of the contribution in equilibrium, but this may not generate higher expected utility for donors. Chapter 2 presents a dynamic model of charitable giving. At each period, donors contribute to an NPO's endowment; the NPO provides a charitable good and invests in the  financial market. Investments are made in a risky asset and a risk-free asset. I introduce two types of shocks to account for uncertainty: donors' income shock and  financial market fluctuations. I show that the optimal share of disposable endowment invested in risky asset is constant. Donors' strategy, whether to contribute or free-ride on the NPO's investments, depends on donors' shadow prices. Donors contribute when NPO's endowment is relatively low. Large contribution levels encourage the NPO to participate in the capital market at the expense of providing charitable good. I show that the NPO prefers an environment with a lower rate of return on risk-free assets. NPO's risk exposure to the  financial market affects both NPO's and donors' decisions. However, risk exposures on donors' side do not impact parties' decisions. Regulation analysis suggests that portfolio ceiling and provision floor are achievable. Chapter 3 links two data sources: the National Center for Charitable Statistics (NCCS) data over the period of 1987-2014 and the U.S. presidential elections data. I develop a dynamic model to examine how the national-level political incumbent shapes the NPOs' risky investment portfolio selection, adjusting for a set of NPOs' intrinsic characteristics and real interest rate. I  find that right-leaning Republicans act as a rein on NPOs' risky investments, i.e., a Republican administration is associated with a reduction in NPOs' holdings of corporation stocks and a 16.28% reduction in equity share relative to a Democratic administration. It is attributed to the impact of the Republican administration by more facilitating NPOs' accessibility to borrowing than having a Democratic president. I argue that NPOs behave as backward-looking investors or are reluctant to change their portfolio due to the significant portfolio adjustment cost, using past performance as an indicator to make their current risky investment decisions. Heckman two-step estimation indicates that NPOs' investment is an endogenous sample selection instead of a random choice. I show that NPOs have a less extensive equity share with more severe agency costs; foundation size plays a different role when NPOs decide whether to invest in risky assets compared with investing NPOs. Moreover, for investing NPOs, the equity share is expected to decrease by 12.0% if there is a 1% increase in the real interest rate; NPOs are more inclined to invest in risky assets when the real interest rate increases, in the sense of riding with the rational bubble.

This paper focuses on identifying factors influencing the financing decisions of growth-oriented start-ups. A sample of 8 business incubator start-ups has been studied within a qualitative research so as to reach that goal. Their fundraising choices are analyzed using supporting financial and psychological theories. Also, the thesis examines the start-ups’ interaction with a business incubator and investors.It is found that growth oriented start-ups use internal funds in the first instance, the lack of financial capital representing the main reason behind this decision. Moreover, it is clear that bank loans are not a viable alternative for start-ups mainly because of the collaterals required. However, debt financing, coming from more accessible sources, is used despite the higher costs, this if it helps in achieving growth. Lastly, equity capital is regarded positively by growth oriented start-ups although it dilutes the control. The reasoning is that control is traded-off with the skills and experience the external investors bring in once with their investments.

The literature suggests that when taking tax effects into account, debt ought to be preferable to equity. Thus, with all else being equal, levered firms are expected to show higher firm values. However, there are no uniform predictions of the size of this tax benefit from interest deductibility nor on the effect of changes in interest deductibility. We believe that the German corporate tax reform in 2008, which introduced an interest barrier, can serve as a promising "quasiexperiment" to investigate the effects from a reform of interest deductibility. A study of this reform on the basis of German financial statement data is of general interest because, first, similar interest barriers have been introduced in several countries and proposed by the OECD to fight BEPS. Second, the major characteristics of the German tax system can be regarded as representative for most European and major Asian countries. Third, single entity financial statements for German companies allows us to capture tax and capital structure details that have not been available in most prior studies. With significance at the 5% level, we find evidence that the companies that are affected by the interest barrier reduce their leverage by 4.7 percentage points more than companies that are not affected by the interest barrier. We are the first to employ a detailed matching approach to the underlying rich dataset, which enables us to overcome several limitations of previous studies. Our results imply that capital structure reactions most likely have been underestimated in previous studies. / Series: WU International Taxation Research Paper Series

There is still limited knowledge available on how SME and midcap firms perform financing decisions and on what such a decision is based on. The literature revealed that capital structure theories can only partly explain parameters that determine financing decisions, particularly in a bank dominated lending environment like in Germany. Academic research tried to expand towards a broader and more strategic approach regarding a financing strategy and towards behavioural bias of a company's management. Furthermore, existing research tried to identify an interaction between business strategy and financing strategy but failed to identify a causal direction so far. The present research provides a unique research approach to bridge this gap as it introduces a new aspect into the discussion on the decision for a financing instrument and whether a formulated financing strategy is followed. Based on a case study approach that combines manager interviews, document analysis and calculation of key financial ratios, the research explores the management's decision in a specific situation, the refinancing of standard mezzanine. Firms that used standard mezzanine had to perform a decent refinancing decision between the years 2011 and 2014 as there was no exact substitute instrument available in financing markets anymore. The results showed that a financing strategy exists in the cases explored, but elements and form varied across cases. In addition, the cases indicated that behavioural bias on management level might exist, based on identified inefficiencies and delays. However, these inefficiencies cannot be primarily assigned to owner-managers as done by previous research. Furthermore, a causal direction between business strategy and financing strategy could be indicated in the cases investigated. The results led to the development of a financing strategy typology, based on existing types of business strategies that might help to explain financing decisions. A template for a holistic financing strategy has been designed based on the investigations that allows midcap firms to establish and implement their own financing strategy (or adjust their existing strategy). The holistic framework provides core elements and financing principles as well as a prototype financing process that help to avoid the identified inefficiencies in their financing processes.

This study investigates why some firms have no debt in their capital structure despite the potential benefits of leverage. A logistic regression analysis is used to examine the impact of firm-specific characteristics on a firm’s propensity to have zero leverage. The validity of five theoretical explanations for the zero-leverage phenomenon are examined based on how the theories predict characteristics to affect a firm’s propensity to be unlevered. Analysing a new sample of Swedish firms listed on Nasdaq Stockholm in 2005-2018, I show that on average 14.2% of all firms are unlevered. The regression results suggest that the phenomenon of zero-leverage firms can be explained by a combination of several theories. Some firms seem forced to follow zero-leverage policies due to credit rationing by lenders. Others appear to be deliberately debt-free either because they have low needs of external financing or because they strategically want to avoid debt. The study’s main findings for zero-leverage firms are also robust to firms with very low debt (book leverage less than 5%).

This dissertation consists of three essays on firms' behaviors under staggered treatment adoption. The first essay draws information from a micro-lender and a credit bureau to identify the causal effects of small loans on the financial health of a group of small U.S. business owners. To achieve this, we exploit temporal variations in the loan disbursements and use an estimation strategy that controls for potential biases due to treatment effect heterogeneity. The results suggest that even small loans are effective in generating lasting positive impacts on widely accepted financial health indicators, such as Vantage Score (Credit Score), Debt-to-Income Ratio, and Credit Utilization Ratio. We obtain similar robust results for subprime and startup borrowers, who are known to face difficulties in securing credit. The second essay combines unionization data from the National Labor Relations Board and financial data from Compustat to examine the causal effects of unionization on the financing decisions of publicly traded firms in the United States. In this essay, I exploit temporal variations in the election date of unionization across firms and use a dynamic difference-in- difference estimation strategy to identify the effects of unionization on a range of financial indicators, including the Debt-to-Equity ratio, market leverage, book leverage, long-term book leverage, net leverage and cash to asset ratio. I find that unionization negatively affect firms' financing decisions. For example, after unionization, firms rely less on leverage to raise capital. At the same time, unionization offers incentive to firms to hold more cash in hand. My analysis also suggests that the effects of unionization vary according to the political and institutional structure of the states in which firms operate. For instance, the impacts on the outcome variables are more pronounced for the firms in democrat-led states and for firms which operate in states without right-to-work laws. The effects of unionization are also more noticeable for multi-establishment firms versus one-establishment firms. In addition, we find that the effects vary according to the margin of support for unionization within a firm. The third essay examines the causal effects of unionization on innovation activities of publicly traded firms in the United States. As in the case of chapters 1 and 2, the analysis uses a dynamic difference-in-difference estimation strategy on a dataset that is compiled using information on unionization data from the National Labor Relations Board, financial data from Compustat and KPSS patent data. My analysis encompasses a wide range of innovation indicators, including the number of patents, number of forward citations, market value of patents, average citations, number of patents to RandD expenditures ratio, number of citations to RandD expenditures ratio, number of patents per 1000 employees, capital expenditures to sales ratio and RandD expenditures to sales ratio. The findings suggest a small positive impact of unionization on most of these innovation indicators, with the exception of market value of patents and number of patents to RandD expenditures ratio. I also find that the effects of unionization vary according to political orientations of states, industry type, firm size and firm age. The results demonstrate that the effects on innovation are more pronounced for smaller and younger firms and for firms operating in democrat-led states as well as manufacturing firms. / Doctor of Philosophy / This thesis is a collection of three self-contained essays that examine the firms' behaviors in contexts where not all the units received the treatment at the same point in time. In the first essay, we investigate how small loans affect the financial health of small business owners. By analyzing data from a lender and credit bureau, we identify the causal effects of receiving loans on the financial health of borrowers. The results indicate that even small loans have a positive and lasting impact on credit scores, debt-to-income ratios, and credit utilization ratios. This research also sheds light on the effects of loans on borrowers with less favorable credit status or those starting a new business, who often face challenges in accessing credit. In the second essay, the focus shifts to the impact of unionization on the financing decisions of publicly traded firms in the United States. We examine the causal effects of unionization on various financial indicators. The findings reveal a negative effect of unionization on metrics such as debt-to-equity ratio, market leverage, and book leverage. However, cash holdings experience an increase. Furthermore, the effects of unionization vary based on the political and institutional structure of the states where firms operate, as well as the margin of support for unionization within a firm. The impact of unionization is more pronounced in democrat- led/without right-to-work law states, multi-establishment firms and when the support for unionization is stronger among employees. In the third essay, we investigate the effects of unionization on innovation activities within publicly traded firms in the United States. By analyzing unionization data, financial data, and patent data, the study examines the causal effects of unionization on various innovation indicators. The results reveal a small positive impact of unionization on most innovation indicators, such as the number of citations, number of patents per 1000 employees as well as ratio of number of citations to RandD expenditures. However, the effects on market value of patents and number of patent-to-RandD expenditure ratios are not statistically significant. Moreover, the analysis considers factors like political orientations of states in which the firms operate, industry type, firm size and firm age. The findings indicate that the effects on innovation outcomes are more pronounced for smaller firms, younger firms, firms operating in democrat-led states and manufacturing firms.

Made available in DSpace on 2016-04-25T18:40:16Z (GMT). No. of bitstreams: 1 Claudio Junior Bernardo.pdf: 362107 bytes, checksum: 15a103dae1eca502a54a5453cd2d708c (MD5) Previous issue date: 2016-01-27 / Coordenação de Aperfeiçoamento de Pessoal de Nível Superior / This study aimed to examine the influence of institutional factors in determining the capital structure of Latin American firms and to analyze if the significance of institutional factors to explain the firms' capital structure is changed considering the short and long term debt. The sample was composed by public companies from six Latin American countries: Argentina, Brazil, Chile, Colombia, Mexico and Peru, analyzed during 2009-2014. Linear hierarchical models (or multilevel regression) for processing the data were used. Six leverage indicators were used as dependent variables. As explanatory variables, firm variables (business characteristics) and country variables (macroeconomic and institutional factors) were considered. These variables have been identified in the literature as important determinants of firms' capital structure. The main results show that both variables (firm and country characteristics) are important determinants of firms' capital structure. However, firm variables explain a much larger percentage of variance. These results can be derived from the similarity of economic contexts of the six countries analysed. Probably, in future work, if countries with very different macroeconomic and institutional features are inserted in the analysis, the results can change significantly. Thus, it is emphasized that much remains to be done to analyze the effects of institutional factors on the capital structure of companies. It is expected that this study has generated new contributions to national literature on capital structure, by using a theoretical approach, as well as econometric, still little explored in the literature and offer suggestions for future work on the subject, thereby contributing to the academy. It is also expected that the research will contribute to the agents of the capital market by analyze the determinants of the capital structure considering the institutional aspects as well as the relevance of these variables in the financing decision process / Esta pesquisa teve por objetivo examinar a influência de fatores institucionais na determinação da estrutura de capital de empresas latino-americanas, bem como analisar se a significância de fatores institucionais para explicar a estrutura de capital das empresas é alterada considerando a decomposição do financiamento em curto e longo prazos. A amostra investigada foi composta por companhias abertas pertencentes a seis países latino americanos: Argentina, Brasil, Chile, Colômbia, México e Peru, analisadas durante o período 2009-2014. Foram utilizados modelos hierárquicos lineares (ou regressão multinível) para tratamento dos dados. Como variáveis dependentes, foram considerados seis indicadores de alavancagem e como variáveis explicativas, foram consideradas variáveis de firma (características das empresas) e país (fatores macroeconômicos e institucionais) identificadas na literatura como importantes determinantes da estrutura de capital. Os principais resultados evidenciam que, tanto as variáveis representativas de características de firma, quanto as variáveis representativas de países, são importantes determinantes da estrutura de capital das empresas. No entanto, as variáveis de firma explicam um percentual de variância muito maior. Estes resultados podem ser derivados da similaridade dos contextos econômicos dos seis países analisados. Provavelmente, em trabalhos futuros, caso sejam inseridos na análise países com características macroeconômicas e institucionais muito distintas, o resultado possa se alterar significativamente. Assim, ressalta-se que ainda há muito a ser feito para análise dos efeitos de fatores institucionais sobre a estrutura de capital das empresas. Espera-se que este estudo tenha gerado novas contribuições para a literatura nacional sobre estrutura de capital, por utilizar uma abordagem teórica, e também econométrica, ainda pouco exploradas na literatura da área, fornecendo subsídios para futuros trabalhos sobre o tema, contribuindo, dessa forma, para a academia. Também se espera que a pesquisa contribua para os agentes do mercado de capitais ao analisar os determinantes da estrutura de capital considerando os aspectos institucionais, bem como a relevância dessas variáveis quando da decisão de financiamento por parte das empresas