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Two Essays in Behavioral Corporate F...

Cornell University.

Two Essays in Behavioral Corporate Finance.

Record Type:	Electronic resources : Monograph/item
Title/Author:	Two Essays in Behavioral Corporate Finance.
Author:	Onuk, Cagri Berk.
Published:	Ann Arbor : ProQuest Dissertations & Theses, 2019
Description:	130 p.
Notes:	Source: Dissertations Abstracts International, Volume: 80-12, Section: A.
Notes:	Publisher info.: Dissertation/Thesis.
Notes:	Advisor: Bailey, Warren.
Contained By:	Dissertations Abstracts International80-12A.
Subject:	Management.
Online resource:	http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=13815110
ISBN:	9781392249710

Two Essays in Behavioral Corporate Finance.
Onuk, Cagri Berk.

Two Essays in Behavioral Corporate Finance. - Ann Arbor : ProQuest Dissertations & Theses, 2019 - 130 p.

Source: Dissertations Abstracts International, Volume: 80-12, Section: A.

Thesis (Ph.D.)--Cornell University, 2019.

This item must not be added to any third party search indexes.

The two essays in my dissertation are broadly related to the behavior and decision-making of firm managers and directors, and how those variables are associated with firm outcomes and firms’ relationship with investors.The first essay examines the disagreement within the executive team. The model shows the negative effect of disagreement on firm outcomes via executives’ reduced effort and the positive effect via decision enhancement. In a novel manner, I identify disagreement through information-based insider trades in opposing directions. The outcome I analyze is firm investments including capital expenditures, acquisitions, and R&D expenses. I uncover negative effects of disagreement on capital expenditures, which is statistically and economically significant. Decision enhancing effects are measured as reduction in a firm’s tendency to overinvest, but the results are weaker. Disagreement also hurts firm valuation especially when firms need quick decisions. Overall, disagreement is found to have more harmful than beneficial effects on firms.The second essay, coauthored with Orhan Erdem, examines the effect of piety on individual investor and corporate decision-making, and on the interactions between the two types of agents. We use Turkey as our experimental setting, where piety is likely to have an important effect on financial outcomes due to the country’s unique political and religious background. We have proprietary individual investor trading data for a random sample of 25,000 investors, and importantly, we have a number of strong identifiers for investor piety. One of them is a binary variable that indicates whether investors are trading through an Islamic brokerage house. Similarly, we have a few strong variables capturing firm piety. One such variable identifies whether firm executives are affiliated with a secular or a conservative executive club. Our results indicate that religious investors display conservative trading behavior, in particular, they display less overconfidence and higher local bias. Results on firms indicate that apparently religious firms grow their assets faster and are highly valued but have lower operating profitability. We also find that upon events that stir religious sentiment in the country, conservative investors increase their holdings of apparently religious firms.

ISBN: 9781392249710Subjects--Topical Terms:

180005
Management.
Subjects--Index Terms:

Behavioral biases

Two Essays in Behavioral Corporate Finance.
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500 $a Source: Dissertations Abstracts International, Volume: 80-12, Section: A.
500 $a Publisher info.: Dissertation/Thesis.
500 $a Advisor: Bailey, Warren.
502 $a Thesis (Ph.D.)--Cornell University, 2019.
506 $a This item must not be added to any third party search indexes.
506 $a This item must not be sold to any third party vendors.
520 $a The two essays in my dissertation are broadly related to the behavior and decision-making of firm managers and directors, and how those variables are associated with firm outcomes and firms’ relationship with investors.The first essay examines the disagreement within the executive team. The model shows the negative effect of disagreement on firm outcomes via executives’ reduced effort and the positive effect via decision enhancement. In a novel manner, I identify disagreement through information-based insider trades in opposing directions. The outcome I analyze is firm investments including capital expenditures, acquisitions, and R&D expenses. I uncover negative effects of disagreement on capital expenditures, which is statistically and economically significant. Decision enhancing effects are measured as reduction in a firm’s tendency to overinvest, but the results are weaker. Disagreement also hurts firm valuation especially when firms need quick decisions. Overall, disagreement is found to have more harmful than beneficial effects on firms.The second essay, coauthored with Orhan Erdem, examines the effect of piety on individual investor and corporate decision-making, and on the interactions between the two types of agents. We use Turkey as our experimental setting, where piety is likely to have an important effect on financial outcomes due to the country’s unique political and religious background. We have proprietary individual investor trading data for a random sample of 25,000 investors, and importantly, we have a number of strong identifiers for investor piety. One of them is a binary variable that indicates whether investors are trading through an Islamic brokerage house. Similarly, we have a few strong variables capturing firm piety. One such variable identifies whether firm executives are affiliated with a secular or a conservative executive club. Our results indicate that religious investors display conservative trading behavior, in particular, they display less overconfidence and higher local bias. Results on firms indicate that apparently religious firms grow their assets faster and are highly valued but have lower operating profitability. We also find that upon events that stir religious sentiment in the country, conservative investors increase their holdings of apparently religious firms.
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