Essays on (Frictions in) Corporate Finance
This dissertation is composed of three related essays that contribute to the literature on corporate finance. My first chapter proposes a new, direct measure of managerial attention to financial markets, derived from earnings call transcripts covering 98,010 firm-year observations between 2007 and 2023. Firms led by more attentive managers display stronger investment–price sensitivity, offering the first direct evidence in support of price feedback theory. Greater attention also improves managers’ timing ability, enabling them to access external capital more readily when financing needs arise and to adjust more effectively to changing market conditions. Finally, I present a theoretical model, corroborated by empirical evidence, that explains why it may be rational for some managers to remain inattentive. In the second chapter, we contribute to addressing a central challenge in sustainable investing—distinguishing value from values (Starks 2023). Exploiting the Tick Size Pilot Program (TSP)—a natural experiment that raised participating firms’ tick size from one cent to five cents—we show that green institutional investors with relatively low willingness to pay for environmental objectives (i.e., value-oriented investors) exert a significant influence on corporate environmental policies. During the TSP, these value investors became less likely to divest after environmental incidents at treatment firms compared with control firms. Consequently, treatment firms experienced declines in their environmental ratings, especially those most vulnerable to exit threats over environmental issues. In the third chapter, we explore how the specificity of legal regulations influences crowdfunding activity. Analyzing a global sample of digital finance, we find that clear and detailed regulations substantially increase crowdfunding volumes. Using proxies for regulatory detail across three types of countries—those that sometimes, always, or never had regulations—and applying a series of difference-in-differences regressions, we document a strong positive link between regulatory clarity and the volume of debt crowdfunding, with little effects on equity crowdfunding. Clearer regulations appear to stimulate the establishment of new crowdfunding platforms rather than merely concentrating activity within existing ones.
Behavioral Finance, Corporate Finance, Machine Learning, Real Effects of Financial Markets, Sustainable Finance
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