City Research Online

Abstract

The aim of this thesis is to identify non-financial determinants of corporate policies. The three essays study legal speech protections, shareholder ESG preferences and peer information as respective determinants of cash holdings, ESG performance and organisational design.

The first chapter studies legal protection of public criticism, which raises the expected cost of firms’ intangible liabilities. In a stacked difference-in-differences design built on the staggered adoption of state anti-SLAPP (Strategic Lawsuits Against Public Participation) laws, firms increase cash holdings after enactment. The increase is concentrated in firms with greater ex ante exposure to intangible liabilities, in firms whose customers face
lower switching costs, and in industries with high-skilled workforces. Firms fund the accumulation internally, forgoing acquisitions and net investment. The precautionary motive outweighs the reduction in the cost of external financing that the same laws produce.

The second chapter studies the ESG preferences of shareholders inherited in a merger, which can differ from those of the acquirer’s existing shareholders. Across stock-financed deals, acquirers adjust their ESG risk toward that of the target, and the adjustment is concentrated in deals where the acquirer enters with higher ESG risk. The response is stronger where inherited shareholders wield greater influence and under mandatory ESG disclosure. Plant-level evidence from the Toxics Release Inventory shows the same adjustment at continuing facilities. Emissions fall when incoming shareholders are cleaner than the acquirer’s existing base and rise when they are dirtier. The changes operate mainly through waste management and are concentrated in counties where regulatory discretion is greater.

The third chapter studies the information about industry peers that mandatory reporting makes available to business group headquarters. In a 2007 German reform that enforced the publication of limited liability firms’ financial statements, greater headquarters peer information reduces vertical integration and redistributes subsidiaries more evenly across hierarchical layers. The reduction in vertical integration is stronger where supply chain holdup exposure is greater and weaker in concentrated output markets. The redistribution across layers is stronger where productivity dispersion is high and weaker under import competition.

Together, the three essays show that these determinants have first-order effects on corporate financial, environmental and organisational policies. They work through distinct mechanisms of precautionary demand, catering and transaction cost reduction. The findings indicate that beyond financial conditions, corporate policies respond to legal and regulatory changes, ownership shifting and the external information environment.

Publication Type:	Thesis (Doctoral)
Subjects:	H Social Sciences > HG Finance
Departments:	Bayes Business School > Bayes Business School Doctoral Theses Bayes Business School > Faculty of Finance Doctoral Theses

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