This thesis examines debt maturity and trade credit in public and private firms. It consists of three essays that try to answer the following questions: Does the IPO decision affect the debt maturity structure of a firm? Do private firms use more or less trade credit than public firms? Does the supplier's listing status affect its trade credit provision? The first essay investigates the effect of an initial public offering (IPO) on the evolution of debt maturity structure using a sample of U.S. firms that went public during the period 1998-2011. I find that firms decrease their short-term debt by 19% in the first two years after the IPO and decrease it post-IPO, by about 7% relative to the pre-IPO level. These results continue to hold in a sample of new debt issues, in a difference-in-difference regression of IPO and non-IPO firms, in a treatment regression to account for endogeneity of the IPO decision, and in an instrumental variable regression to control for the joint determination of leverage and debt maturity. Further results show that the decline in short-term debt post-IPO is consistent with the asymmetric information and agency costs of equity theories and inconsistent with the agency costs of debt theory. I also find that the IPO effect on debt maturity was magnified during the recent financial crisis. The second essay explores the use of trade credit by public and private firms using a sample of U.S. firms during the period 1995-2012. Evidence shows that private firms use more trade credit by about 40.4% than public firms. This result is robust to models accounting for sample selection and for the endogeneity associated with a firm's decision to go public. In line with the asymmetric information and credit constraints theories, private firms that are young, have more growth opportunities, and fewer tangible assets rely more on trade credit than their public counterparts. Compared to private firms, public firms are faster in adjusting toward their target trade credit due to their lower adjustment costs. I also find that during the recent financial crisis, public firms increased their reliance on trade credit, while, suppliers granted private firms less trade credit. The third essay examines the supply side of trade credit; more specifically, the impact of a supplier's listing status on its trade credit provision using a sample of U.S. firms during the period 1994-2012. The findings show that public firms provide nearly a quarter more trade credit than their private counterparts. I propose that this is because public firms have higher financial capability, better ability in handling the trade credit process, and in enforcing payments and contract terms, than private firms. I rule out that the endogeneity of the listing decision and the observable differences between public and private firms have driven my earlier results. Additional tests show that firm characteristics, industries types, and level of competition, have a significant impact on the level of trade credit provided by public and private firms. The results also indicate that both types of firms provided less trade credit during the recent financial crisis.

This paper tests the notion that private firms are more tax aggressive than public firms. Tax avoidance measures, e.g. effective tax rates, cannot be used to compare private and public firms when private and public firms have different levels of importance on financial accounting earnings (Hanlon and Heitzman 2010). To disentangle financial reporting incentives from tax aggressiveness, I use the fact that European groups must prepare two sets of financial statements: first, group statements (consolidated), which provide information to investors, and, second, individual statements (unconsolidated), which are used for legal purposes, but not to inform investors. Since in individual statements financial reporting incentives do not vary between public and private firms, I use these effective tax rates to compare private and public firms. My findings show that public, not private, firms are more tax aggressive, as the effective tax rates of public firms are lower in individual and group statements. (author's abstract) / Series: WU International Taxation Research Paper Series

Thesis advisor: Thomas J. Chemmanur / Thesis advisor: Arthur Lewbel / The dissertation aims to investigate the role of asymmetric information in capital structure, investment, compensation of mortgage servicers, and bond and equity returns. Specifically, I evaluate the impact of credit ratings on debt issuance and investment of private and public firms, as well as the effect of asymmetric information on compensation of loan servicers in the mortgage backed securities market. Further, I study the relationship between ratings issued by investor and issuer-paid credit rating agencies and equity analyst recommendations. Finally, I evaluate the effect of the aforementioned signals on bond and equity returns as well as firm leverage and investment decisions. Chapter one in the dissertation is the first study to empirically evaluate the effect of credit ratings on capital structure and investment for private U.S. firms, relative to equivalent public firms. I find that private firms constrain debt issuance and investment by 4.5 and 6.5 percentage points more than public firms, respectively, when their credit ratings are on upgrade or downgrade thresholds. Consistent with these results, private firms that become public through an IPO constrain debt issuance by 10 percentage points before going public, if their ratings are on an upgrade or downgrade boundary. The second chapter studies the impact of asymmetric information between mortgage sellers and servicers on mortgage servicer compensation. We proxy for asymmetric information using the decision to retain mortgage servicing rights, which creates a principal-agent problem between sellers and servicers. Using loan-level data on Fannie Mae-insured, full documentation mortgages, we first find that loans in which sellers retain servicing rights default and foreclose at a significantly lower rate, and lose less in foreclosure than those in which they are not retained. Since it is more costly to service non-performing loans, these ex-post differences in default rates should be reflected in servicer compensation. However, using Fannie Mae MBS pool-level data, we find no difference in servicing fees for pools in which servicing rights are retained relative to pools in which they are not retained. In order to identify the impact of seller/servicer affiliation on servicing fees, we exploit a post-crisis regulatory change which altered the incentive to retain servicing rights for small sellers of MBS relative to large sellers. Finally, in the third chapter, we evaluate the information flows to the stock and bond markets of issuer versus investor-paid rating agencies and equity analysts. Equity analysts' forecasts and ratings assigned by issuer-paid credit rating agencies such as Standard and Poor's (S&P) and by investor-paid rating agencies such as Egan and Jones (EJR) all involve information production about the same underlying set of firms, even though equity analysts focus on cash flows to equity and bond ratings focus on cash flows to bonds. Further, the two types of credit rating agencies differ in their incentives to produce and report accurate information signals. Given this setting, we empirically analyze the timeliness and accuracy of the information signals provided by each of the above three types of financial intermediary to their investor clienteles and the information flows between these intermediaries. We find that the information signals produced by EJR are the most timely (on average), and seem to anticipate the information signals produced by equity analysts as well as by S&P. We find that changes in leverage are associated with lower EJR ratings but higher equity analyst recommendations; further, credit rating changes by EJR have the largest impact on firms' investment levels. We also document an "investor attention" effect (in the sense of Merton, 1987) among stock and bond market investors in the sense that changes in equity analyst recommendations have a higher impact than either EJR or S&P ratings changes on the excess returns on firm equity, while EJR rating changes have a higher impact on bond yield spreads than either S&P ratings changes or changes in equity analyst recommendations. Finally, we analyze differences in bond ratings assigned to a given firm by EJR and S&P, and find that these differences are positively related to the standard proxies for disagreement among stock market investors.

本研究主要針對我國上市櫃輔導之制度，探討撤銷上市(櫃)輔導公司之中，獲准上市(櫃)之公開發行公司，與其他自願撤銷輔導上市櫃之公開發行公司相較，於撤銷輔導上市櫃之前二年至後二年的研究期間，兩者之間的盈餘品質是否存在差異。 實證結果顯示，以損失認列時效性迴歸模型分析時，獲准上市(櫃)之公開發行公司較自願撤銷輔導上市櫃之公開發行公司有較佳的盈餘品質；以盈餘時效性迴歸模型分析時，自願撤銷輔導上市櫃之公開發行公司較獲准上市(櫃)之公開發行公司有較佳的盈餘品質。本研究推論此分歧結果，由我國臺灣證券交易所股份有限公司有價證券上市審查準則與財團法人中華民國證券櫃檯買賣中心證券商營業處所買賣有價證券審查準則對於申請上市(櫃)之獲利門檻要求所造成。 / Based on regulations on listing guidance released by the Taiwan Stock Exchange Corporation (TSEC) mission, this study investigates the difference in earnings quality between firms that voluntarily cancel their listing guidance applications and firm that complete their initial public offerings (IPOs) over the period of two years prior to the cancellation and two years after the cancellation of listing guidance application. The results show that, under timeliness in loss recognition regression model, using a two-year duration prior to the IPO or listing guidance application cancellation for research period, the earnings quality of IPO firms over the two-year-period prior to their IPOs is better than that of firms voluntarily cancelled their listing guidance applications. On the contrary, under timeliness in earnings regression model, earnings quality of firms cancelled their listing guidance application voluntarily is better than that of the IPO firms. The empirical evidence thus suggests that the inconsistence on earnings quality measured in terms of loss and earnings recognition may due to the profitability threshold imposed by TSEC and GreTai Securities Market on rules governing the review of stock listings.