Thesis advisor: Thomas Chemmanur / My dissertation consists of three chapters. In the first chapter, I analyze the impact of firms' innovation success on their corporate financial policies. I hypothesize that innovation success reduces the information asymmetry facing firms and, through the information channel, affects their capital structure and dividend policies. I measure innovation success using the quantity and quality of patents. I show that firms with higher innovation success face lower information asymmetry, measured using analyst coverage, dispersion, and forecast error. Further, I show that firms with higher innovation success have lower leverage ratios; have a greater propensity to issue equity rather than debt; and have lower dividend payout ratios. I establish causality using instrumental variable analyses with patent examiner leniency as an instrument for patent grants. In the second chapter, co-authored with Thomas Chemmanur, Xuan Tian, and Qianqian Yu, we analyze the impact of trademarks in entrepreneurial firms' success. We hypothesize that trademarks play two economically important roles for entrepreneurial firms: a “protective” role, leading to better product market performance; and an “informational” role, signaling higher firm quality to investors. We develop testable hypotheses based on the above two roles of trademarks, relating the trademarks held by private firms to the characteristics of venture capital (VC) investment in them, their probability of successful exit, their valuations at their initial public offering (IPO) and in the immediate secondary market; institutional investor IPO participation; post-IPO information asymmetry; and post-IPO operating performance. We test these hypotheses using a large and unique dataset of trademarks held by VC-backed private firms. We establish causality using an instrumental variable (IV) analysis using trademark examiner leniency as the instrument. For private firms, we find that the number of trademarks held by the firm is positively related to the total amount invested by VCs and negatively related to the extent of staging by VCs. We show that the number of trademarks held by a firm increases its probability of successful exit (IPOs or acquisitions). Further, for the subsample of VC-backed firms going public, we show that the number of trademarks held by the firm leads to higher IPO and immediate secondary market firm valuations; greater IPO participation by institutional investors; a lower extent of information asymmetry in the equity market post-IPO; and better post-IPO operating performance. In the third chapter, co-authored with Thomas Chemmanur and Jinfei Sheng, we develop testable hypotheses and empirically analyze the effects of outside investors having access to soft information such as online employee ratings from the Glassdoor website on firms' financing and investment policies. We find that higher online employee ratings are associated with larger equity issue announcement effects; a greater propensity to have positive announcement effects and to issue equity rather than debt to raise external financing; higher investment expenditures; greater equity issue participation by institutional investors; and better long-run post-issue operating performance. We establish causality using a difference-in-differences methodology relying on the staggered adoption of anti-SLAPP laws across U.S. states. / Thesis (PhD) — Boston College, 2020. / Submitted to: Boston College. Carroll School of Management. / Discipline: Finance.
| Identifer | oai:union.ndltd.org:BOSTON/oai:dlib.bc.edu:bc-ir_108781 |
| Date | January 2020 |
| Creators | Rajaiya, Harshit |
| Publisher | Boston College |
| Source Sets | Boston College |
| Language | English |
| Detected Language | English |
| Type | Text, thesis |
| Format | electronic, application/pdf |
| Rights | Copyright is held by the author. This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (http://creativecommons.org/licenses/by-nc-nd/4.0). |
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