Essays on Firm - Investor Relations and Organizational Misconduct

Ding, Yijia (2023) Essays on Firm - Investor Relations and Organizational Misconduct. Doctoral thesis, University of London: London Business School.

Abstract

My thesis focuses on the topics of firm–investor relations and organizational misconduct. My first chapter uses data on flight paths of corporate jets to assess the likelihood that executives are engaging in private meetings to provide market sensitive information to large investors ahead of key events, such as share repurchase announcements and positive earnings surprises. This study contributes to a sociopolitical perspective on corporate governance by showing that providing inside information to shareholders is one covert way in which executives provide substantial favors to the investors who are important for the pursuit of their political interests. In my second chapter, I document that a government policy that most would agree is beneficial for social welfare (i.e., closing an ethically dubious tax loophole used by institutional investors) had a depressive impact on strategic actions that many would consider desirable (e.g., R&D and capital investments) among the firms in which the affected investors had invested. This study advances research on firm–investor relations and firm reactions to capital market pressures. My third chapter develops a theory of organizational control to identify characteristics of organizations that may increase the likelihood that their members engage in severe acts of abuse towards people under their control or care. Using data on the sadistic abuse of vulnerable patients by care home staff, we show that organizational context can unleash the darker inclinations in human behavior. Overall, my thesis extends research on organizational misconduct by highlighting the role of organizational context as antecedents of abusive behavior within organizations and the importance of using indirect ways to expose fraud and liminal behavior. My thesis also contributes to research on firm–investor relations by providing insight into the quid pro quo relationships between executives and institutional investors and showing how executives’ attempts to adapt to investors’ idiosyncratic financial circumstances and interests may constrain their firms’ future actions.