Essays on corporate finance

• Main Author: Thng, Tiffany Yi Hong
• Published: University of Reading 2018
• Online Access: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.758156

This thesis revolves around the theme of corporate finance. The first and last chapters provide the overview and summary respectively. The second chapter examines the impact of gender diversity of executive and non-executive (E&NE) directors on equity underpricing. Hand-collected data on U.S. firms that have issued Initial Public Offerings (IPO) and primary Seasoned Equity Offerings (SEO) show evidence of a positive relation between female E&NE members’ representation and IPO underpricing, but no influence on SEO underpricing. Results are given by the periods before the Sarbanes-Oxley Act as IPO underpricing diminishes due to an increase in information disclosure of firms with more than two female directors. The third chapter examines how and why venture capital-backed firms manage their tone during IPO and SEO. Analysis conducted using the Management Discussion and Analysis section of the prospectuses demonstrates that VC-funded firms are more negative in tone and in order to reduce litigation risks and protect their reputational capital; the effects of tone conservatism are more pronounced when they hire large auditors, receive more analyst coverage, operate in high tech sectors and in industries facing high litigation risk. Negative tone is not related to the conveying of private information as IPO firms that received VC funding experience larger surprise unexpected returns and perform better than non-VC backed offers in the long run. Finally, the fourth chapter studies the impact of the presence of directors who are patent holders of the same firm on firms’ innovation outcomes. Applying a name matching algorithm to the U.S patent database to identify these directors, I document a positive relation between their presence and the intensity of patent applications and citations received by the firms. Despite experiencing stricter regulatory regime after the passage of the Sarbanes-Oxley Act and an increase in the demand for technological related expertise, results remain consistent.