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Title page for ETD etd-07172013-192331


Type of Document Dissertation
Author Reza, Syed Walid
Author's Email Address syed.reza@owen.vanderbilt.edu
URN etd-07172013-192331
Title Essays in corporate governance
Degree PhD
Department Management
Advisory Committee
Advisor Name Title
William G. Christie Committee Chair
Alexei V. Ovtchinnikov Committee Member
Craig M. Lewis Committee Member
Hans R. Stoll Committee Member
Richard H. Willis Committee Member
Keywords
  • Agency costs
  • Corporate philanthropy
  • Officers’ fiduciary duties
  • Mergers and acquisitions
  • CEO compensation
  • Corporate charities
  • Corporate governance
Date of Defense 2012-11-12
Availability unrestricted
Abstract
The dissertation consists of three essays. The first essay finds that corporate giving is associated with CEO characteristics, but not with measures of firms most likely to benefit in terms of increased profitability. This result is robust to a natural experiment and holds even among firms that are most likely to benefit from corporate giving. Analysis of firm value shows that shareholders discount the equity value of cash for firms making large charitable contributions. To examine when corporate giving represents an agency problem, I focus on CEO preferences, stock price reactions to the initial disclosure of corporate giving where executives and directors have personal interests, corporate contributions to company-sponsored foundations where shareholders lose their claims to these often sizable assets, the relation between CEO compensation and corporate giving (presuming it is a perquisite), and strategic uses of corporate giving that build CEO social ties with the independent directors. My results indicate that CEOs advance their personal interests when firms contribute and suggest that the value reduction is due to managerial misuse of corporate resources. In the second essay, I use a 2009 Delaware case law as a natural experiment to examine the effect of officers’ fiduciary duties (OFDs) on corporate acquisition decisions. I find that acquirers whose officers were protected from market discipline prior to 2009 experienced increased announcement-period abnormal stock returns after the event, mainly because post-event acquisitions by these firms created more synergies and reduced officers’ control. I also find that OFDs are more important in firms where officers have wealth risk, face less product market competition or are insulated from the market for corporate control. These results suggest that OFDs are a critical corporate governance mechanism that works in tandem with other disciplinary mechanisms. In the third essay, I use natural disasters as potential shocks to firm-specific performance and find that the compensation of both CEOs and non-CEO top executives is asymmetrically adjusted for exogenous changes in firm-specific performance. The results are robust to the inclusion of several corporate governance measures, supporting the hypothesis that asymmetric pay-for-performance sensitivity is a result of implicit incentives.
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