Three Essays in Empirical Finance
This dissertation constitutes a comprehensive tripartite examination within empirical finance, each section distinct in its inquiry and implications. The first essay embarks on an empirical investigation into Bitcoin arbitrage, focusing on the practicalities of modern financial instruments and revealing the dynamics of price disparities between significant trading platforms such as Coinbase and Binance. Through examination of high-frequency data spanning the years of 2019 to 2021, this inquiry delineates the influence of market events and the composition of investor bases on price spreads, providing insights into arbitrage opportunities and augmenting our comprehension of the dynamics within the cryptocurrency markets.
The second essay delves into the complex bond amongst stakeholder orientation and the strictness of bank loan covenants, employing a quasi-experimental framework to probe the ramifications of constituency statutes across various states in the United States. Through a rigorous difference-in-differences analysis, this research uncovers how legal protections for stakeholders beyond shareholders affect the formulation of bank loan covenants. It illuminates the ramifications of a stakeholder-oriented approach to corporate governance on the dynamics of debt contracts, thereby offering a seminal contribution to corporate finance discourse.
The third essay investigates the influence that visits from Chinese governmental officials have on firm subsidies and operational success of corporations, analysing a dataset covering 14,559 official visits to 3,611 listed companies from 2007 to 2019. This study reveals that visits, especially by high-level officials, correlate with increased government subsidies and positive financial outcomes for firms, underscoring the strategic use of such visits for political and economic objectives. The findings illuminate the interplay between political actions and corporate strategy in China, offering novel insights into the mechanisms through which official visits influence corporate governance and performance.
Collectively, these essays contribute significantly to the empirical finance literature, each highlighting different aspects of the field. The first essay provides a detailed exploration of cryptocurrency arbitrage, offering guidance for investors and researchers in navigating the complexities of digital asset markets. The second essay advances the understanding of the interaction between stakeholder orientation and loan covenant strictness, enriching theoretical discussions in corporate finance. The final essay conducts a meticulous critique of how visits by government officials influence corporate strategies and outcomes, thereby enriching the conversation on governance and finance. Such examination underscores the weight of governmental interactions in the corporate sphere, pointing towards on their pivotal role in shaping business practices and overall corporate achievement. This thesis not only enhances the understanding of diverse financial phenomena but also bridges theoretical explorations with practical implications, marking a valuable addition to the dynamic and multifaceted domain of finance.
