Essays in Corporate Finance

  • Yan Xu

Student thesis: Phd


This thesis presents three essays related to corporate finance. The first essay focuses on a firm’s going public decision, the second essay examines the value of CEOs’ innovation leadership, and the third essay studies the impact of a CEO’s social performance on her reputation and career. The first essay studies the antecedents and consequences of U.K. reverse takeovers (RTOs). I find private firms seeking exchange listing tend to choose RTO instead of IPO in poor market conditions. Related, RTO firms do not hoard cash out of capital raised as IPO firms often do. Compared to IPO firms, RTO firms spend less capital raised on paying dividends and retiring debt. They are not, however, much different from IPO firms in terms of post-listing business expansion, access to external equity market or operating performance. Overall, our evidence suggests that U.K. firms strategically time their RTO listings and RTOs do not introduce inferior listings. In the second essay, I examine whether the outside director labor market values CEOs’ innovation leadership and how innovation leadership diffuses across firm boundaries. I find a robust positive relation between the strength of a CEO’s innovation leadership, measured by her on-the-job innovation performance, and the likelihood and number of her outside directorships. CEOs with proven innovation leadership are more popular among firms that are more innovative or have technologies more similar to the CEOs’ own firms. Firms appointing innovative CEOs onto their boards significantly improve their innovation and operating performance in post- appointment years. I conclude the benefit of CEO innovation leadership diffuses across firm boundaries via a subsection of the labor market. The third essay is related to the effect of a CEO’s social performance on her reputation and career. I find the CEOs of those firms having greater strengths (controversies) in corporate social responsibilities (CSR) are more (less) likely to serve on external boards and they hold more (fewer) outside directorships. This effect vanishes when the CEOs’ own firms are poorly governed. My findings suggest the leadership of using CSR to engage stakeholders and maximize shareholders’ value is a highly-valued type of human capital. My results also indicate that the outside director labor market provides an effective market-based institution for promoting CSR.
Date of Award1 Aug 2019
Original languageEnglish
Awarding Institution
  • The University of Manchester
SupervisorIan Garrett (Supervisor) & Ning Gao (Supervisor)

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