Essays on corporate finance and investment

Human capital is considered fundamental and crucial for economic growth in the modern knowledge-based economy. In this dissertation, I explore several aspects of human capital and examine its financial implications. First, we focus on a key dimension of human capital, diversity, and examine the relationship between inventor diversity and stock returns. We find that the market does not immediately price the full value of inventor diversity. Firm with diverse inventors have significantly superior stock returns than firms with more homogeneous inventors. Second, we examine the impact of medical marijuana legalization on firm value and performance using the staggered passage of medical marijuana across U.S. states. We find that the legalization of medical marijuana has a positive impact on firms, likely by affecting the human capital of firms.

Another part of my dissertation comprehensively examines and contrasts different types of mergers and acquisitions. Mergers could be between rival firms (horizontal), between supplier and customer firms (vertical) or between firms in unrelated industries (diversifying). I find significant difference across horizontal, diversifying, and vertical mergers in their merger activity and value creation, which should be carefully considered in M&A research.