This dissertation is comprised of two essays in which I investigate the idea that cross-subsidization of poorly-performing units within conglomerates is a cause for the value loss from diversification. In the first essay, I document a significant curvilinear relation between the value of...

Using a sample of 249 firms that went public over 1975-1984, I provide evidence on how and why ownership and board structures evolve over the subsequent 16 years. I find that changes in ownership and board structures are related to lifecycle changes that alter the relative cost/benefit of...

The first essay tests alternative theories about the effect of asset liquidity on capital structure and debt capacity. Using data from a broad sample of U.S. public companies, I find that leverage is positively related to asset liquidity. The relation is stronger following negative shocks to...

This paper examines how the price-setting process for Initial Public Offerings (IPOs) is influenced by Securities and Exchange Commission (SEC) regulations. The findings indicate a significant positive relation between underpricing and the presence of a regulatory constraint requiring an...

Material-Adverse-Change (MACs) clauses in merger agreements allow for the allocation of risk between the target and acquirer over the time period from the announcement to the completion of the acquisition. I find that MACs are more prevalent as a condition for completing the acquisition than any...

Using a sample of 11,629 firm-years between 1993 and 1998, I examine the investment policies of firms in Japanese industrial groups. My findings indicate that internal capital markets among keiretsu firms are active. Investment at the firm level is positively correlated with cash flows from the...

I provide evidence on the inefficient internal capital market hypothesis by examining the separation of a conglomerate through a spinoff. I document that (i) pre-spinoff firms are valued less than a portfolio of the industry matched single segment firms be cause headquarters allocates funds...

I analyze corporate dividend decisions in the U.S., Canada, U.K., Germany, France and Japan. The proportion of dividend payers declines in all countries in the last decade. The sharpest decline occurs in the U.S., and the smallest in Japan. In all countries, the changes in the proportion of...

This study examines the extent of managerial discipline and corporate restructuring in firms suffering substantial declines in industry-adjusted operating performance over the period 1985 to 1992. The sample period encompasses an active takeover period (1985-1988) and a less active takeover...

Previous studies report that cash holdings are more valuable for financially constrained firms than for unconstrained firms. We examine (i) why this is so and (ii) why some constrained firms appear to hold too little cash. Our results indicate that greater cash holdings are associated with...