On Corporate Hedging and Firm Focus and on Bank Board Structure

This dissertation consists of two essays: one looks at the relation between firm focus and hedging in the REIT industry, and the other compares bank board structures in China and the US. The first essay presented in Chapter 2 examines the relation between corporate hedging and firm focus in the REIT industry by using a sample of REITs in 2005 and in 2007. We find 46.41% utilization rate in 2005 and 43.41% in 2007. Consistent with our hypothesis, we find that, relative to diversified firms, focused firms are more likely to engage in hedging. Focused firms also tend to be involved in greater amount of hedging. We also document a negative relation between hedging and transparency, although the evidence is not overwhelming. Consistent with previous literature, there is a strong firm size effect. The second essay presented in Chapter 3 examines the relation between bank performance and board structure by using a sample of 74 US banks and 53 Chinese banks for the period 2002 to 2006. Indeed, the empirical relation between board structure and performance is virtually non-existing in China. In particular, for the US sample, the board size is found to be significantly and negatively correlated with ROA, but a larger board also tends to be associated with lower costs. For Chinese banks, the evidence indicates that governance variables are not significantly correlated with performances with the exception of block ownership: there is strong evidence that the relation between block ownership and bank performance is negative. Additionally, we find substantial differences in board structure between the two countries; in particular the average board size and the proportion of outside directors for US banks are almost twice of those in China.