Dissertation
Essays on corporate investment
University of Iowa
Doctor of Philosophy (PhD), University of Iowa
Summer 2023
DOI: 10.25820/etd.006985
Abstract
This dissertation studies three aspects of corporate investment: green innovation, firm investment, and mergers and acquisitions. In the first chapter, I study how green patents affect follow-on green innovation at the firm level. To provide causal evidence, I examine whether green patents granted by lenient examiners lead firms to generate more green patents in the future. I find no persistent and robust effect of green patent grants on firms' subsequent green innovation. Green innovation does not lead to increases in institutional ownership and Environmental, Social, and Governance (ESG) scores, suggesting that the absence of positive market reception hinders the facilitation of continuous green innovation. Moreover, firms that were more active in green innovation in the past are found to be less likely to generate new green patents in the future.
In the second chapter, Suyong Song and I study a nonlinear relationship between firm investment and Tobin's q in the cross section of firms. After correcting for nonseparable measurement error in q with the aid of a repeated measurement, we find evidence of heterogeneity in the investment-q relation. The investment-q sensitivity is little for firms with low and high q. On the other hand, the relationship is most sensitive to intermediate values of q. In the cross section, the true investment-q relation is thus not thoroughly linear, and investments are rather clustered at both ends of q.
In the third chapter, Erik Lie, Amrita Nain, and I find that in many cases, mergers that were previously considered failed for exogenous reasons are in fact failed deals caused by non-exogenous reasons. We suggest that a control group of failed mergers should be constructed as conservatively as possible when estimating merger effects. A deal that failed for a non-obvious reason can be classified into a completely different group at one’s discretion, and results can be easily biased due to misclassified mergers. We provide supporting evidence suggesting that previous results documented in the literature are possibly vulnerable to the choice of a control group.
Details
- Title: Subtitle
- Essays on corporate investment
- Creators
- Hyunbok Wee
- Contributors
- Erik Lie (Advisor)Amrita Nain (Committee Member)Suyong Song (Committee Member)Tong Yao (Committee Member)
- Resource Type
- Dissertation
- Degree Awarded
- Doctor of Philosophy (PhD), University of Iowa
- Degree in
- Business Administration (Finance)
- Date degree season
- Summer 2023
- DOI
- 10.25820/etd.006985
- Publisher
- University of Iowa
- Number of pages
- xii, 124 pages
- Copyright
- Copyright 2023 Hyunbok Wee
- Language
- English
- Date submitted
- 07/24/2023
- Description illustrations
- tables, graphs
- Description bibliographic
- Includes bibliographical references (pages 110-120).
- Public Abstract (ETD)
- In this dissertation, I study corporate investment behavior and its implications. In the first chapter, I examine how green patents affect the follow-on green innovation of a firm. I find no persistent and robust effect of green patent grants on a firm’s subsequent green innovation. I find evidence that green innovation does not lead to increases in institutional ownership and Environmental, Social, and Governance (ESG) scores, suggesting that the absence of positive market reception hinders the facilitation of continuous green innovation.
In the second chapter, after correcting bias caused by measurement error in the proxy of investment opportunities, Suyong and I find that firm investment does not always increase with investment opportunities. Instead, firms invest similarly low when they have limited investment opportunities. Likewise, when firms face abundant investment opportunities, they make high-level investments in a similar manner, resulting in firm investments clustered at both extremes of investment opportunities.
In the third chapter, Erik Lie, Amrita Nain, and I show that merger effects can be differently estimated depending on which failed mergers are employed as a comparison. A deal that failed for a non-obvious reason can be classified into a completely different group at one’s discretion, and results can easily change due to misclassified mergers. We find evidence suggesting that previous results documented in the literature are possibly vulnerable to the choice of failed deals.
- Academic Unit
- Tippie College of Business
- Record Identifier
- 9984454434402771
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