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Thesis advisor: Robert G. Murphy / Thesis advisor: Fabio Schiantarelli / Thesis advisor: James Anderson / This dissertation consists of four essays. The first two essays investigate macroeconomic fluctuations and their sources. The third and fourth essays examine international capital mobility. / Thesis (PhD) — Boston College, 1994. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

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Thesis advisor: Fabio Ghironi / Chapter 1: Foreign Direct Investment and Contract Enforcement Many developing countries are financially constrained and therefore have to rely on international capital flows to finance economic activity. Empirical evidence shows that Foreign Direct Investment (FDI) as a percentage of total capital flows is higher for less developed countries compared to more developed countries. This chapteruses a dynamic contracting model with human capital to explain why less developed countries receive a greater percentage of capital flows as FDI. I analytically show that countries that are financially constrained have a higher share of FDI in total capital flows, and that the share of FDI in total capital flows is increasing in human capital flows. In addition, the positive association between the share of FDI in total capital flows and human capital flows is decreasing in the degree of financial constraints. I construct a measure of intangible assets of FDI and find empirical support for the analytical results. Chapter 2: Trade Liberalization, Firm Heterogeneity, and Unemployment: An Empirical Investigation This chapter is a joint work with Yoto V. Yotov. We provide empirical evidence for the interaction between firm-level total factor productivity and trade liberalization as key determinants of firm-level job destruction caused by trade. Employing US firm-level data, we find strong empirical support for the following: a) All else equal, a one percent increase in total factor firm productivity decreases trade-induced layoffs by 32%; b) An additional percent of trade liberalization increases the number of firm-level trade-induced layoffs by 2%; c) Trade liberalization results in an increase in the minimum level of productivity required for domestic production; d) Trade liberalization lowers the minimum productivity threshold required for exporting; e) The increase due to trade liberalization in the minimum productivity threshold for domestic production is larger than the absolute decrease in the export productivity threshold. Chapter 3: Do Audit Fees Influence Credit Risk and Asymmetric Information Problems? Evidence from the Syndicated Loan Market This chapter is a joint work with Lewis W. Gaul. We examine whether an increase in the demand for auditing services is associated with a decrease in borrowers' credit risk and asymmetric information problems in the syndicated loan market. In the syndicated loan market, potential accounting errors exacerbate credit risk and asymmetric information problems. The purpose of financial statement audits is to provide reasonable assurance that accounting records are free from material errors. We hypothesize that if audit fees face an upward sloping supply curve for auditing services, an increase in the demand for auditing services increases both the equilibrium price and quantity of auditing services purchased. We interpret the equilibrium quantity of auditing services as the number of auditing hours billed and the price of auditing services as the hourly fee. We assert that an increase in the quantity of auditing services purchased reduces the likelihood of an accounting error because auditors exert more effort verifying the accuracy of accounting records. We present empirical evidence that a demand-induced increase in audit fees is associated with syndicated loans with lower interest rate spreads and shorter maturity lengths, which we interpret as evidence consistent with the assertion that these audit fee increases reduce credit-risk and asymmetric information problems. We empirically identify an increase in the demand for auditing services with instrumental variables that are intended to capture shifts in the demand curve for auditing services, rather than shifts in the supply curve for auditing services. In addition, we find that audit fees are positively associated with the number of lenders in loan syndicates, but are unable to attribute this association to an increase in the demand for auditing services. / Thesis (PhD) — Boston College, 2009. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

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This thesis explores three important topics spanning international asset pricing, empirical capital structure, U.S. politics, and corporate law: relationship-specific investment (RSI), contracting environment and financial performance; RSI, contracting environment and the choice of capital structure; and political value and SEC enforcement actions. Firms that engage in long-term bilateral relationships with their buyers or suppliers are usually required to make relationship-specific investments. We examine how the values of these long-term specific investments are affected by the quality of governmental contract enforcement. We find that firms in relationship-specific industries have higher valuations, measured by Tobin’s Q, when their countries of origin are able to strongly enforce contractual agreements. Our finding is robust to a variety of empirical specifications and regression methods. We also show that as legal quality improves, firms with relationship-specific investments exhibit lower operating performance, presumably due to risk or in order to motivate further investments from their stakeholders. Further analysis of the cross-section of stock returns supports a risk-based explanation. Firms in long-term bilateral relationships with their customers or suppliers are required to make relationship-specific investments in the form of physical equipment, human resources, specific production sites, or brand names. These dedicated assets are usually tied to a particular use or relationship and cannot be redeployed if the firm is liquidated. In the absence of legal enforcement, firms are required to limit their use of debt financing and, consequently, signal a reduced default risk to encourage investment by their contracting parties. Using a sample of 143,278 firm-year observations, and measures of industry-level relationship-specificity and the quality of legal enforcement across 57 countries, we find strong evidence that good quality contract enforcement mitigates the negative association between relationship-specificity and debt financing. The Securities and Exchange Commission (SEC) plays a central role in investigating potential violations of securities laws and initiating enforcement actions in the United States. We examine the association between political culture and political connections and the penalties imposed at the end of SEC enforcement actions. Our analysis is based on two key ideas. First, the political culture of a firm indicates its ethical boundaries and explains the propensity of misconduct across different domains, such as securities laws. Second, political connections signal a firm’s willingness to challenge SEC’s enforcement decisions. We find that the individual defendants associated with Republican firms are less likely to receive a bar or suspension penalty. This finding supports the notion that Republican managers are less likely to commit securities fraud since the Republican ideology stresses market discipline. Moreover, in line with prior research, our results show that political connections and firm size, as a proxy for bargaining power, also reduce penalties imposed in SEC enforcement actions. / Thesis / Doctor of Philosophy (PhD)

Thesis (M.Com. (Economics & Economic History)) - Rhodes University, 2009. / A thesis submitted in partial fulfilment of the requirements for the degree of Master of Commerce (Financial Markets)

Venture capital (VC), a historically American industry, has been in the process of globalizing in recent years. International venture capital flows (investing outside of one’s own country) have grown substantially over the past 30 years and even more dramatically in just the past decade. Previous research has mostly highlighted the determinants of where capital flows. However, research on the factors in a VC’s home country that affect investments abroad has been underdeveloped. To address this gap, this paper explores the impact of home country economic conditions on VCs’ propensity to invest abroad. I find that higher interest rates and economic wellbeing in a country (as measured by GDP growth and stock market capitalization to GDP) are associated with less deal flow abroad and, that higher foreign exchange rates are related to greater deal flow. I also note an interesting divergence in the role of these factors between VCs located in countries that exhibit different levels of international investing experience. My research indicates that VCs’ home country economic conditions do play a role in their decisions to invest abroad and suggests that these considerations may be different depending on the experience level of the VC industry in the firm’s country.

<p>Diss. Stockholm : Handelshögskolan i Stockholm, 2008</p>