The thesis focuses on European countries which underwent so-called partial democratization in the last quarter of the 20th century. It starts from the polemic with Mansfield and Snyder who claim that a (partial) democratization leads to war. The development in Europe of the last quarter of the 20th century, however, seems to contradict this notion. The aim of the thesis is, thus, to contribute to the debate of war-proneness of democratizing states by answering the following question: What caused that the democratization did not lead to war in many cases? Due to the nature of the research question as well as to the number of cases (i.e. 20) the method applied here is qualitative comparative analysis using the so-called fuzzy set method. The application of this method as such is a secondary aim of the thesis. Possible causal conditions of the absence of war which are under study here also derive mostly from the conclusions made by Mansfield and Snyder. The main focus is put on the so-called golden parachute. Among other causes are strong institutions - conceptualized here as weak and weakened executive, political integration into international community, duration of independent statehood and at least some experience with democracy - and developed economy - conceptualized through GDP, economic...

ESSAY 1We examine the effect of governance environment on the composition of a country's external capital structure, specifically foreign equity investment. In addition to the absolute quality of the host country's governance environment, we consider the host country's governance quality relative to that of the source (investor) country. Unlike previous studies, which utilize country totals, we examine foreign investment positions between pairs of individual countries. Our sample includes 3,891 bilateral investment positions among 49 source countries and 69 host countries for years 2009 through 2011. We find that relative governance, rather than absolute governance, plays a role in foreign investment. Specifically, a host country with lower governance quality relative to the source country (a greater difference) attracts less FDI as a share of foreign equity investment. Our results suggest that prior studies, which identified absolute governance as a significant factor, were evaluating an incomplete picture. When the focus is solely on the host country, the policy prescription appears rather straightforward--all countries should pursue higher governance quality to attract more foreign investment from all sources. We challenge this notion by showing that: a) different source countries evaluate host-country governance differently; and b) this evaluation is influenced by the difference between the governance environments of the two countries. ESSAY 2Highly publicized governance failures in recent years have renewed research efforts to investigate the consequences of specific governance mechanisms. A better understanding of executive compensation contracts, specifically golden parachutes, is especially critical given their notorious status in the corporate governance debate. Instead of examining the explicit incentive role of golden parachutes (GPs) in influencing managerial behavior, we study their role as a tool for screening and recruiting reputable CEOs in a situation where recruitment would otherwise be difficult--severe financial distress that eventually leads to Chapter 11 bankruptcy. If GPs enable distressed firms to recruit reputable CEOs, there should be an observable link between the presence of GPs in employment contracts for newly hired CEOs and value-preserving firm outcomes. For our sample of firms, all of which filed for bankruptcy, this can be measured by the outcome of the bankruptcy proceedings, specifically the avoidance of liquidation. Thus, we hypothesize a negative relationship between the presence of GPs for newly hired CEOs and the probability of liquidation in bankruptcy. Consistent with this hypothesis, we find that firms led by newly hired CEOs with GPs are liquidated less often than other firms. This suggests that, regardless of their efficacy as corporate governance mechanisms, GPs can create value for shareholders.