Bae, Chang Suk
(2021)
Three Essays on Finance and Product Market Competition.
Doctoral Dissertation, University of Pittsburgh.
(Unpublished)
Abstract
This dissertation consists of three essays on finance and product market competition. In the first essay, I investigate corporate agility, the importance of which is emphasized in both field and academic research but understudied empirically. Using the business descriptions provided in firms’ 10-K filings with the SEC as the main input, I construct a novel measure of corporate agility and confirm its validity. Next, I identify various firm flexibility measures as the determinants of corporate agility. I next find that product market performance improves with agility in the short-run and firm survival likelihood increases with agility in the long-run. I also document that the benefits of corporate agility are particularly realized when firms face industry-wide common shocks such as R&D or M&A waves, or trade barrier reductions and that firms increase agility at the expense of short-term profitability. Lastly, I find that agility is a negative predictor of future returns even after controlling for other firm risks and characteristics.
In the second essay, I investigate negative externalities of innovations along supply chains by analyzing the effects of customers’ innovations on suppliers’ trade credit provision. I find that suppliers extend more trade credit after customers innovate, and the effect is robust to controlling for various firm characteristics and industry-specific market conditions and to addressing potential endogeneity issues. The effect is mainly driven by the holdup channel as opposed to the demand channel or the financing channel. Next, I document that greater technological overlap between customers’ innovation and suppliers’ innovations attenuates the effect. Lastly, I find that suppliers adopt more conservative financial policies and innovate more by learning from customer’s innovation.
In the third essay, I investigate industry spillover effects of corporate fraud. Using a sample of securities class action lawsuits, I document that fraud mitigates financial constraints of product market rivals. This positive intra-industry spillover effect is stronger for firms in more concentrated industries or firms with less analyst coverage. In contrast, fraud worsens financial constraints for firms in the top-supplier and top-customer industries of the fraud firms. The negative spillover effect is dependent on trade credit provision.
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Details
| Item Type: |
University of Pittsburgh ETD
|
| Status: |
Unpublished |
| Creators/Authors: |
|
| ETD Committee: |
|
| Date: |
7 July 2021 |
| Date Type: |
Publication |
| Defense Date: |
21 May 2021 |
| Approval Date: |
7 July 2021 |
| Submission Date: |
1 July 2021 |
| Access Restriction: |
No restriction; Release the ETD for access worldwide immediately. |
| Number of Pages: |
199 |
| Institution: |
University of Pittsburgh |
| Schools and Programs: |
Joseph M. Katz Graduate School of Business > Business Administration |
| Degree: |
PhD - Doctor of Philosophy |
| Thesis Type: |
Doctoral Dissertation |
| Refereed: |
Yes |
| Uncontrolled Keywords: |
Product market competition, textual analysis, corporate agility, innovation |
| Date Deposited: |
07 Jul 2021 11:17 |
| Last Modified: |
07 Jul 2021 11:17 |
| URI: |
http://d-scholarship.pitt.edu/id/eprint/41379 |
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