Three essays in finance

• Main Author: Chiou, Jian-Jia
• Other Authors: Qifei Zhu
• Format: Thesis-Doctor of Philosophy
• Language: English
• Published: Nanyang Technological University 2024
• Subjects: Business::Finance
• Online Access: https://hdl.handle.net/10356/173320
• Institution: Nanyang Technological University

My thesis contains three essays in finance field, engaging in topics regarding seasoned equity offerings, corporate innovation, corporate governance, common ownership, board gender diversity, retail investors, and market efficiency,. In Chapter 1, this essay highlights the significance of product disclosure (PD) following seasoned equity offerings (SEOs) in indicating potential failure risks within the uncertain landscape of the innovation process. Employing a news-based dataset, we observe a substantial increase in PD relating to innovation progress post-SEO, in contrast to disclosures concerning new product introductions. Moreover, we find a negative association between post-issue operating performance and progress-type PD. These findings imply a tendency in equity markets to underestimate the failure risks associated with product innovation. The robustness of our results is maintained even after controlling for endogeneity concerns. In Chapter 2, this essay investigates the potential of common ownership to expand the pool of female director candidates and alleviate the underrepresentation of women on corporate boards. Using the California Senate Bill No. 826 and peer female director appointments as quasi-experimental settings, my findings demonstrate that firms under common ownership exhibit greater female board representation and a higher propensity to appoint new female directors. Furthermore, these firms show an increased likelihood of women attaining leadership positions on board committees. My results remain robust to accounting for the activeness of the Big Three, underscore the network effect of common ownership on the supply side of the labor market for female directors. In Chapter 3, using trade-level data from the Taiwan Stock Exchange, we document an asymmetric pattern of liquidity provision by individual investors who serve as de facto market makers. Specifically, on average, individual investors provide more liquidity during market declines. We further investigate the impact of asymmetric individual liquidity provision on market efficiency. Despite being uninformed, individual investors’ liquidity provision ameliorates market efficiency more during market declines. Our results suggest that individual investors provide liquidity to help those with private information correct prices toward efficient prices, in turn, enhancing market efficiency.