Essay OneUnder the principal-agent framework, we study and compare different compensation schemes commonly adopted by hedge fund and mutual fund managers. We find that the option-like performance fee structure prevalent among hedge funds is suboptimal to the symmetric performance fee structure....

Hedge funds feature special compensation structure compared to traditional investments. Previous studies mainly focus on the provisions and incentive structure of hedge fund contract, such as 2/20, hurdle rates, and high-water mark. The first essay develops an algorithm to empirically estimate...

The average investor reaction is neutral to primary offerings by firms with managerial incentives closely tied to the shareholder value. Investors react negatively (1) when there are insufficient managerial ownership stakes to deter misuse of SEO proceeds and (2) when there are negative signals...

The first essay proposes potential benefits from monitoring as important determinants of institutional block holding, where the measures for monitoring benefits are identified from the information asymmetry problem. Using U.S. data, I find that firms’ agency problems attract large...

This paper investigates the empirical determinants of corporate cash holdings in the euro area as a function of firm size. The results show that there are significant differences in investment in liquid assets for firms of different size. More specifically, liquid assets for smaller firms in the...

Using a database of more than 180,000 private companies from 2000 to 2009, we find that the benefits of holding more cash vary substantially with a firm’s size and the conditions it faces. Cash holdings matter most for small firms: when there are negative shocks to industry or macroeconomic...

This thesis presents two essays in Corporate Finance. In the first essay, I use the August 2007 crisis episode to gauge the effect of financial contracting on real firm behavior. I identify heterogeneity in financial contracting at the onset of the crisis by exploiting ex-ante variation in...