Three essays on empirical finance

• Main Author: Peng, Zhuozhen
• Other Authors: Byoung-Hyoun Hwang
• Format: Thesis-Doctor of Philosophy
• Language: English
• Published: Nanyang Technological University 2023
• Subjects: Business::Finance
• Online Access: https://hdl.handle.net/10356/166173
• Institution: Nanyang Technological University

This dissertation includes three essays on corporate finance. Chapter 1: This paper conducts textual analysis on sell-side analyst reports and online stock opinion articles, which recommend that investors buy stocks that, based on prior literature, trade at comparatively high prices and earn low future returns. We test whether the justifications provided in these buy recommendations mostly (1) emphasize a stock’s safe-haven quality, (2) indicate investor exuberance, or (3) point to a preference for stocks with high upside potential. We find that the buy recommendations mostly emphasize stocks’ upside potential. Our results suggest that non-traditional investor preferences play a dominant role in explaining the cross-section of expected stock returns. Chapter 2: This paper examines the relation between financial technologies (Fintech) and countries’ economic resilience from COVID-19 around the world. Measuring the demand for Fintech services using Google search volumes of high-frequent Fintech-related phrases, we document that developing countries and those with underdeveloped Fintech industry exhibit more significant Fintech demand surges during the pandemic. Moreover, stronger Fintech is positively associated with GDP growth and negatively related to unemployment rates. We develop a comprehensive economic resilience measure to capture both the speed and strength of economic resistance and recovery in response to the pandemic shock. Our analysis reveals that Fintech can serve as an essential enabler and accelerator of economic growth, contributing to economic stability and resilience from the global health crisis. Chapter 3: This paper examines the relation between newly registered trademarks and different types of institutional investors. The results show that firms with more diversified institutional ownership are associated with larger numbers of new trademark registrations. This positive effect of diversified institutional ownership is more pronounced under the following conditions: when diversified shareholders are more effective in their governance, when CEOs have fewer incentives to take risks, when CEOs are less entrenched, and when firms operate in a more product-oriented and competitive environment. This study further shows that diversified institutional investors tend to promote new product development that focuses on existing businesses rather than expanding into new segments, and they are inclined to register more trademarks that contain common words overlapping with their existing trademarks. Whereas firms with higher levels of under-diversified institutional ownership tend to generate trademarks of lower economic quality. Taken together, our analysis reveals the important role of diversified institutional ownership in shaping firms’ trademark activities.