Essays in empirical corporate finance

Meier, J-M (2017) Essays in empirical corporate finance. Doctoral thesis, University of London: London Business School.

Abstract

My thesis consists of three chapters. In the first chapter, called "The Bright Side of Fire Sales", we document that firms that buy distressed assets in fire sales earn excess returns that are two percentage points higher than in regular acquisitions. Buyers can take advantage of fire sales by distressed companies needing to sell assets while restructuring, suggesting that the overall welfare losses associated with re sales are smaller than previously thought. These results have implications for policy makers evaluating the merits of bailouts as a tool to prevent potential welfare losses associated with fire sales. In the second chapter, we study the impact of inclusive institutions on innovation. We use the timing and geography of the French occupation of different regions of Germany after the 1789 French Revolution as a shock to the institutions of those regions. Using a novel county-level data set for Imperial Germany, we show that a significantly higher number of patents per capita was generated in counties whose institutions had become more inclusive as a result of the French occupation. The findings point to innovation as a key mechanism through which institutions may generate economic growth. In the third chapter, called "Regulatory Integration of International Capital Markets", I examine the real and financial effects of regulatory integration of international capital markets using a unique policy plan proposed by the European Union. For identification, I exploit the bilateral and staggered nature of laws that are passed at the European level but are implemented by national governments. Over the course of its implementation, regulatory integration leads to large increases in external financing, investment and employment of publicly listed firms. These results highlight the importance of regulatory integration of international capital markets for firms' financing decisions and real outcomes.