{"id":{"repo_id":"uiuc","oai_identifier":"oai:www.ideals.illinois.edu:2142/105886"},"canonical_url":"https://search.dev.ndltd.org/etd/uiuc/oai:www.ideals.illinois.edu:2142/105886","repository":{"repo_id":"uiuc","name":"University of Illinois - Urbana-Champaign","base_url":"https://www.ideals.illinois.edu/oai-pmh"},"display":{"title":"Three essays in corporate finance","abstract":"The first essay, the Financial Consequences of Customer Satisfaction: Evidence from Yelp Ratings and SBA Loans, demonstrates the financial and real consequences of customer satisfaction using a novel and comprehensive Yelp dataset. I show that Yelp ratings are significant indicators of business outcomes in a regression discontinuity design setting. A one-half star increase in Yelp ratings leads to a higher probability of receiving SBA loans, better loan terms, and better loan performance. The results are more pronounced when banks have less information about the borrowers. Yelp ratings become less effective when using repeated loan transactions. Lastly, higher Yelp ratings lead to increases in consumer demand and the likelihood of subsequent business opening. In the second essay, Are Open Market Share Repurchase Programs Really Flexible, I show that open market share repurchase programs are not as flexible as expected, utilizing the financial crisis and predetermined variation in program ending dates. Firms with share repurchase programs ending after December 2007 cut real activities more than otherwise similar firms with programs ending before December 2007. The effects are more pronounced in firms that do not depend on banks, without long-term analyst coverage, without credit ratings, and with no new debt or equity issuance. The freed-up capital indeed goes toward share repurchase programs: firms buyback on average 84% of the predetermined amount of the shares. The third essay, ''Trading'' Political Favors:Evidence from the Impact of the STOCK Act, demonstrates the tacit benefits that accrue to both politicians and the firms to which they are connected through stock ownership. Specifically, we show strong evidence that politicians use private information and political favors for financial gains from stock investments in their personal portfolios, and that these favors have a real impact on the value and economic outcomes of the firms in which they invest. To do so, we assemble the stock ownership and trading data for all members of the U. S. Congress from 2010 to 2013 and use the passage of the Stop Trading on Congressional Knowledge (STOCK) Act in 2012 as an experiment to examine changes in politicians' trading performance as well as in firm value and outcomes. We find that prior to the STOCK Act, members of the Congress earn significant abnormal returns on their stock trades, and an increase in their holdings of a firm's stock positively predicts the firm's likelihood of being acquired as well as its revenue and earnings surprises. After the passage of the Act, politicians exhibit no such informational advantage in trading or outperformance. On the firms' side, we show that companies with politician ownership on average lose 1.4% in value during the three-day window around the Act's passage, while firms not owned by politicians experience no abnormal returns. Correspondingly, after the Act's passage, these politician-owned firms lose a significant amount of procurement contracts and government grants and become less likely to be selected by the government into high-profile trade missions compared to during the pre-Act period. We find that these mutual benefits are particularly pronounced for politicians who are powerful and firms that are politically active.","abstract_html":"The first essay, the Financial Consequences of Customer Satisfaction: Evidence from Yelp Ratings and SBA Loans, demonstrates the financial and real consequences of customer satisfaction using a novel and comprehensive Yelp dataset. I show that Yelp ratings are significant indicators of business outcomes in a regression discontinuity design setting. A one-half star increase in Yelp ratings leads to a higher probability of receiving SBA loans, better loan terms, and better loan performance. The results are more pronounced when banks have less information about the borrowers. Yelp ratings become less effective when using repeated loan transactions. Lastly, higher Yelp ratings lead to increases in consumer demand and the likelihood of subsequent business opening. In the second essay, Are Open Market Share Repurchase Programs Really Flexible, I show that open market share repurchase programs are not as flexible as expected, utilizing the financial crisis and predetermined variation in program ending dates. Firms with share repurchase programs ending after December 2007 cut real activities more than otherwise similar firms with programs ending before December 2007. The effects are more pronounced in firms that do not depend on banks, without long-term analyst coverage, without credit ratings, and with no new debt or equity issuance. The freed-up capital indeed goes toward share repurchase programs: firms buyback on average 84% of the predetermined amount of the shares. The third essay, ''Trading'' Political Favors:Evidence from the Impact of the STOCK Act, demonstrates the tacit benefits that accrue to both politicians and the firms to which they are connected through stock ownership. Specifically, we show strong evidence that politicians use private information and political favors for financial gains from stock investments in their personal portfolios, and that these favors have a real impact on the value and economic outcomes of the firms in which they invest. To do so, we assemble the stock ownership and trading data for all members of the U. S. Congress from 2010 to 2013 and use the passage of the Stop Trading on Congressional Knowledge (STOCK) Act in 2012 as an experiment to examine changes in politicians' trading performance as well as in firm value and outcomes. We find that prior to the STOCK Act, members of the Congress earn significant abnormal returns on their stock trades, and an increase in their holdings of a firm's stock positively predicts the firm's likelihood of being acquired as well as its revenue and earnings surprises. After the passage of the Act, politicians exhibit no such informational advantage in trading or outperformance. On the firms' side, we show that companies with politician ownership on average lose 1.4% in value during the three-day window around the Act's passage, while firms not owned by politicians experience no abnormal returns. Correspondingly, after the Act's passage, these politician-owned firms lose a significant amount of procurement contracts and government grants and become less likely to be selected by the government into high-profile trade missions compared to during the pre-Act period. We find that these mutual benefits are particularly pronounced for politicians who are powerful and firms that are politically active.","abstract_has_math":false,"creators":["Huang, Ruidi"],"institution":"University of Illinois at Urbana-Champaign","degree_name":"Ph.D.","degree_level":"Dissertation","degree_discipline":"Finance","degree_department":null,"school":null,"contributors":["Almeida, Heitor","Xuan, Yuhai","Weisbenner, Scott","Huang, Jiekun"],"advisors":[],"committee_chairs":[],"committee_members":[],"year":2019,"date_issued":"2019-11-26T20:58:35Z","date_published":"2019-11-26T20:58:35Z","updated_at":"2026-07-22T22:24:45Z","subjects":["Financial economics, Corporate finance"],"languages":["en"],"rights":["Copyright 2019 Ruidi Huang"],"rights_urls":[],"identifier_entries":[]},"links":{"outbound_url":"http://hdl.handle.net/2142/105886","outbound_label":"Handle","outbound_source":"dc:identifier"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor","label":"Contributor","values":["Almeida, Heitor","Xuan, Yuhai","Weisbenner, Scott","Huang, Jiekun"]},{"key":"dc:creator","label":"Author","values":["Huang, Ruidi"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date","label":"Dc Date","values":["2019-11-26T20:58:35Z","2021-11-27T10:15:30Z","2019-07-02","2019-08"]},{"key":"dc:type","label":"Dc Type","values":["text"]},{"key":"thesis:degree_discipline","label":"Discipline","values":["Finance"]},{"key":"thesis:degree_level","label":"Degree Level","values":["Dissertation"]},{"key":"thesis:degree_name","label":"Degree Name","values":["Ph.D."]},{"key":"thesis:institution_name","label":"Thesis Institution Name","values":["University of Illinois at Urbana-Champaign"]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["Financial economics, Corporate finance"]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:language","label":"Dc Language","values":["en"]},{"key":"dc:rights","label":"Dc Rights","values":["Copyright 2019 Ruidi Huang"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier","label":"Identifier","values":["http://hdl.handle.net/2142/105886"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description","label":"Description","values":["The first essay, the Financial Consequences of Customer Satisfaction: Evidence from Yelp Ratings and SBA Loans, demonstrates the financial and real consequences of customer satisfaction using a novel and comprehensive Yelp dataset. I show that Yelp ratings are significant indicators of business outcomes in a regression discontinuity design setting. A one-half star increase in Yelp ratings leads to a higher probability of receiving SBA loans, better loan terms, and better loan performance. The results are more pronounced when banks have less information about the borrowers. Yelp ratings become less effective when using repeated loan transactions. Lastly, higher Yelp ratings lead to increases in consumer demand and the likelihood of subsequent business opening. In the second essay, Are Open Market Share Repurchase Programs Really Flexible, I show that open market share repurchase programs are not as flexible as expected, utilizing the financial crisis and predetermined variation in program ending dates. Firms with share repurchase programs ending after December 2007 cut real activities more than otherwise similar firms with programs ending before December 2007. The effects are more pronounced in firms that do not depend on banks, without long-term analyst coverage, without credit ratings, and with no new debt or equity issuance. The freed-up capital indeed goes toward share repurchase programs: firms buyback on average 84% of the predetermined amount of the shares. The third essay, ''Trading'' Political Favors:Evidence from the Impact of the STOCK Act, demonstrates the tacit benefits that accrue to both politicians and the firms to which they are connected through stock ownership. Specifically, we show strong evidence that politicians use private information and political favors for financial gains from stock investments in their personal portfolios, and that these favors have a real impact on the value and economic outcomes of the firms in which they invest. To do so, we assemble the stock ownership and trading data for all members of the U. S. Congress from 2010 to 2013 and use the passage of the Stop Trading on Congressional Knowledge (STOCK) Act in 2012 as an experiment to examine changes in politicians' trading performance as well as in firm value and outcomes. We find that prior to the STOCK Act, members of the Congress earn significant abnormal returns on their stock trades, and an increase in their holdings of a firm's stock positively predicts the firm's likelihood of being acquired as well as its revenue and earnings surprises. After the passage of the Act, politicians exhibit no such informational advantage in trading or outperformance. On the firms' side, we show that companies with politician ownership on average lose 1.4% in value during the three-day window around the Act's passage, while firms not owned by politicians experience no abnormal returns. Correspondingly, after the Act's passage, these politician-owned firms lose a significant amount of procurement contracts and government grants and become less likely to be selected by the government into high-profile trade missions compared to during the pre-Act period. We find that these mutual benefits are particularly pronounced for politicians who are powerful and firms that are politically active.","Submission published under a 24 month embargo labeled 'Closed Access', the embargo will last until 2021-08-01","The student, Ruidi Huang, accepted the attached license on 2019-07-01 at 02:17.","The student, Ruidi Huang, submitted this Dissertation for approval on 2019-07-01 at 02:22.","This Dissertation was approved for publication on 2019-07-02 at 17:15.","DSpace SAF Submission Ingestion Package generated from Vireo submission #14114 on 2019-11-26 at 14:00:40","Made available in DSpace on 2019-11-26T20:58:35Z (GMT). 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I show that Yelp ratings are significant indicators of business outcomes in a regression discontinuity design setting. A one-half star increase in Yelp ratings leads to a higher probability of receiving SBA loans, better loan terms, and better loan performance. The results are more pronounced when banks have less information about the borrowers. Yelp ratings become less effective when using repeated loan transactions. Lastly, higher Yelp ratings lead to increases in consumer demand and the likelihood of subsequent business opening. In the second essay, Are Open Market Share Repurchase Programs Really Flexible, I show that open market share repurchase programs are not as flexible as expected, utilizing the financial crisis and predetermined variation in program ending dates. Firms with share repurchase programs ending after December 2007 cut real activities more than otherwise similar firms with programs ending before December 2007. The effects are more pronounced in firms that do not depend on banks, without long-term analyst coverage, without credit ratings, and with no new debt or equity issuance. The freed-up capital indeed goes toward share repurchase programs: firms buyback on average 84% of the predetermined amount of the shares. The third essay, ''Trading'' Political Favors:Evidence from the Impact of the STOCK Act, demonstrates the tacit benefits that accrue to both politicians and the firms to which they are connected through stock ownership. Specifically, we show strong evidence that politicians use private information and political favors for financial gains from stock investments in their personal portfolios, and that these favors have a real impact on the value and economic outcomes of the firms in which they invest. To do so, we assemble the stock ownership and trading data for all members of the U. S. Congress from 2010 to 2013 and use the passage of the Stop Trading on Congressional Knowledge (STOCK) Act in 2012 as an experiment to examine changes in politicians' trading performance as well as in firm value and outcomes. We find that prior to the STOCK Act, members of the Congress earn significant abnormal returns on their stock trades, and an increase in their holdings of a firm's stock positively predicts the firm's likelihood of being acquired as well as its revenue and earnings surprises. After the passage of the Act, politicians exhibit no such informational advantage in trading or outperformance. On the firms' side, we show that companies with politician ownership on average lose 1.4% in value during the three-day window around the Act's passage, while firms not owned by politicians experience no abnormal returns. Correspondingly, after the Act's passage, these politician-owned firms lose a significant amount of procurement contracts and government grants and become less likely to be selected by the government into high-profile trade missions compared to during the pre-Act period. We find that these mutual benefits are particularly pronounced for politicians who are powerful and firms that are politically active.","Submission published under a 24 month embargo labeled 'Closed Access', the embargo will last until 2021-08-01","The student, Ruidi Huang, accepted the attached license on 2019-07-01 at 02:17.","The student, Ruidi Huang, submitted this Dissertation for approval on 2019-07-01 at 02:22.","This Dissertation was approved for publication on 2019-07-02 at 17:15.","DSpace SAF Submission Ingestion Package generated from Vireo submission #14114 on 2019-11-26 at 14:00:40","Made available in DSpace on 2019-11-26T20:58:35Z (GMT). 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