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My thesis focuses on the topics of firm-investor relations and organizational misconduct. My first chapter uses data on flight paths of corporate jets to assess the likelihood that executives are engaging in private meetings to provide market sensitive information to large investors ahead of key events, such as share repurchase announcements and positive earnings surprises. This study contributes to a sociopolitical perspective on corporate governance by showing that providing inside information to shareholders is one covert way in which executives provide substantial favors to the investors who are important for the pursuit of their political interests. In my second chapter, I document that a government policy that most would agree is beneficial for social welfare (i.e., closing an ethically dubious tax loophole used by institutional investors) had a depressive impact on strategic actions that many would consider desirable (e.g., R&D and capital investments) among the firms in which the affected investors had invested. This study advances research on firm-investor relations and firm reactions to capital market pressures. My third chapter develops a theory of organizational control to identify characteristics of organizations that may increase the likelihood that their members engage in severe acts of abuse towards people under their control or care. Using data on the sadistic abuse of vulnerable patients by care home staff, we show that organizational context can unleash the darker inclinations in human behavior. Overall, my thesis extends research on organizational misconduct by highlighting the role of organizational context as antecedents of abusive behavior within organizations and the importance of using indirect ways to expose fraud and liminal behavior. My thesis also contributes to research on firm-investor relations by providing insight into the quid pro quo relationships between executives and institutional investors and showing how executives' attempts to adapt to investors' idiosyncratic financial circumstances and interests may constrain their firms' future actions.

Securing resources, such as financing, is key to ensuring the growth and survival of all organizations, and especially that of new ventures, engines of innovation in today's knowledgebased economy. And resource-acquisition success of entrepreneurial firms is driven by investors making decisions in the face of high uncertainty and relative lack of information prevalent in the entrepreneurship landscape. In order to march forward with investment decisions despite these challenges, investors are liable to use information or cues that are extraneous to entrepreneurial strategy, or subjectively construct investment opportunities in their minds. Advancing knowledge of performance variance among ventures therefore calls for advancing what we know about how investors process uncertainty along these lines. This dissertation - comprising three interlinked yet distinct studies - is a step towards that direction, with the eventual aim of contributing to the broader strategy & entrepreneurship field. In the first study, drawing on insights from information processing and judgement & decision-making, I examine how properties of entrepreneurial strategy gives rise to investor disagreement, and the performance implications. I study this in the context of investor disagreement on social media at the point of ventures going public, i.e., doing IPOs in the United States. In the second study, I look at the role transient, contextual shocks can play in determining ventures' funding outcomes. Drawing on affect-as-information theory, I postulate that sunnier days improve investors mood, resulting in greater likelihood of investment. Support is found from an archival study of European accelerator demo day programmes, and an experimental study. The third and final study is based on a nuanced perspective on how entrepreneurial metaphors in pitches influence investors. Going beyond existing literature that mostly groups metaphors together (and finding unclear evidence of how they influence the investor), I contend that different metaphors will have differential effects in shaping investors response to a venture's prospects. Empirical support is drawn from a qualitative study of online crowdfunding campaigns and an experimental study.

Despite the importance of corporate disclosures on strategies to capital market participants, the existing academic literature provides limited insights into why and how firm managers disclose their companies' strategies, what information is revealed specifically, and how market participants use or can potentially use such information. This thesis, which includes two studies, aims to fill the knowledge gap by exploring two types of strategy disclosures. In the first study, titled "Strategy-Pay Linkage and Future Performance: Evidence from FTSE 350 Firms' Annual Reports," I examine the economic implications of FTSE 350 firms' strategy disclosures in the annual reports. I find that the level of strategy-pay linkage (i.e., the linkage between strategies and future CEO pay policies) disclosed in the reports is positively associated with the firms' future operating performance. The association is stronger when firms have lower proprietary costs of disclosures, and when they have received more shareholder dissent on the directors' remuneration reports previously. I also document that stronger strategy-pay linkage leads to greater investor consensus about firm value and lower information asymmetry between firm insiders and outsiders. The second study, titled "Strategic Plan Disclosures of Newly Appointed CEOs," is co-authored with Tathagat Mukhopadhyay, James Ryans and Irem Tuna. We examine the determinants and market consequences of strategic plans disclosed by newly appointed CEOs at U.S. public firms. We find that new CEOs who are negatively perceived by investors when the appointment is announced are more likely to disclose a strategic plan within the first year of tenure, and tend to do so earlier than CEOs who are perceived positively. However, these disclosures do not seem to change investors' negative perceptions, as we document a positive relation between market reactions to the CEO appointments and the reactions to the disclosures. In addition, we analyse the content of the strategic plans and find that the disclosures on growth strategies help improve the accuracy of future analyst forecasts.

This thesis presents three essays. The first chapter examines the information content of aggregate mutual fund alpha. Recent evidence shows that mutual funds collectively buy overvalued stocks. I hypothesize that aggregate alpha arises in part from such stocks becoming even more overvalued, and thus is a measure of market overvaluation. A one-standard-deviation increase in aggregate alpha corresponds to a 0.83 percentage point decrease in the following month's excess market return, and aggregate alpha yields a monthly out-of-sample R2 of 3.64%. Moreover, higher aggregate alpha predicts higher anomaly returns and lower aggregate earnings surprises. The market-return predictability stems from funds with high investment in overvalued stocks, and from small-cap or growth investment styles. The evidence is difficult to reconcile with rational explanations based on benchmarking, flow, or catering. The second chapter, joint with Justin Birru, tests a straightforward time-series prediction of sentiment; sentiment should exhibit its strongest effects on asset prices at times when valuations are most subjective. Consistent with this, we show that a one-standard-deviation increase in aggregate uncertainty amplifies the predictive ability of sentiment for market returns by two to four times relative to when uncertainty is at its mean. For the cross-section of returns, the predictive ability of sentiment for test assets expected to be most sensitive to sentiment and for anomalies is substantially larger in times of higher uncertainty. The final chapter, joint with Justin Birru and Hannes Mohrschladt, provides a unifying explanation for a number of existing risk puzzles. Systematic mispricing primarily affects speculative stocks and tends to take the form of overpricing, predicting lower average returns. Because speculative stocks are typically deemed risky by rational models, failing to control for exposure to systematic mispricing can bias tests of risk-return tradeoffs. Controlling for the effects of systematic mispricing, we recover robust positive risk-return relations for a large number of cross-sectional risk proxies, including many low-risk, distress, and illiquidity anomalies.

This dissertation consists of three essays which examine topics in corporate information environment, voluntary disclosure, and the role of geography in shaping corporate policies. The first essay investigates the relation between summary disclosures and retail investor decisions. Using a novel disclosure setting of mutual fund factsheets, which convey short-form summaries of fund performance and risk, I explore voluntary disclosure of mutual funds and its relation with fund flows. I find evidence that flows are more sensitive to performance and risk metrics when disseminated, and therefore made salient, through factsheets than when they are not. Consistent with individual investors with limited attention driving the results, the effect is stronger for flows pertaining to retail share classes. The findings might be of interest to regulators and standard setters as they explore alternative ways of simplifying the communication of relevant information to investors. In the second essay, we examine the role of geography in shaping competitive environment of a firm. As such, we develop a time-varying firm-specific measure of localized competition faced by a given firm in a given year based on firms' disclosures about economically relevant U.S. states in their 10-K filings. We define the competitive effect experienced at firm-level as a combination of the competitive effects of each geographically segmented individual localized market that a firm operates given geographically segmented nature of U.S. market. Then, we validate this measure using major customer and U.S. Census data and document its association with the rate of mean reversion of profitability. Using this novel measure, we show that higher level of localized competition is associated with higher levels of innovation and higher levels of cash and is incremental to alternative measures of product market competition. Further, the economic relevance of the localized competition measure is greater in industries with high geographic segmentation and for firms which are geographically concentrated. The measure also predicts earnings volatility and earnings levels. Overall, our findings suggest that localized competition is one channel by which geography matters for firm?s fundamental performance. Finally, in the last essay, we analyse the way in which corporate investment decisions differ with respect to foreign versus domestic markets. Adapting the design of Biddle et al. (2009) we find evidence that a significant portion of MNCs tend to over-invest in the US while under-investing abroad, consistent with the notion of home bias. Further analysis reveals that the likelihood of an MNC exhibiting home-bias declines when boards are more geographically diverse and when they invest in foreign markets with high quality financial reporting. Preliminary evidence indicates that investors recognize the home bias inherent in MNCs investment decisions. Finally, we document that MNCs tend to cut foreign investment before domestic investment, even when the economics would suggest otherwise, with these firms subsequently experiencing significantly poorer future performance. Taken together our results suggest that managers exhibit a home bias in their investment decisions which may destroy value.

This thesis examines corporate investment decisions and financing choices of firms. It combines an introductory chapter, two essays and a concluding chapter. In the first essay, I investigate the impact of uncertainty on firm-level capital investment and examine whether this effect depends on the degree of competition that firms face. I exploit a unique empirical setting to construct a time-varying uncertainty measure that is exogenous to economic conditions and firm behavior. I show that higher uncertainty results in a decrease in investment for firms in more concentrated industries. The effect is stronger for firms that face higher costs associated with reversing investments. This finding is in line with irreversible investment models that predict a negative relationship between uncertainty and investment. In contrast, firms in highly competitive industries increase investment in response to higher uncertainty, supporting the argument that competition can erode the option value of deferring investment. In that case, other industry and firm characteristics such as operational flexibility can result in increased investment in response to heightened uncertainty. I also find economically significant effects of uncertainty on other types of investment such as R&D spending, advertising and investment in human capital. Collectively, my results illustrate that the degree of competition plays an important role in the link between uncertainty and investment. In the second essay, I examine the benefits foreign firms gain from cross-listing shares on a major U.S. exchange. I study sovereign credit rating changes in 49 countries to investigate whether secondary listings in the U.S. are associated with improvements in a firm's information environment. Controlling for systematic differences in firm characteristics between cross-listed and non-cross-listed firms, I document that firms without a cross-listing experience significantly negative abnormal returns around negative sovereign rating events, while foreign firms with secondary listings on major U.S. exchanges on average experience no significant surprise reaction. I show that these events are value-relevant for cross-listed firms and that the difference in abnormal return behavior is not a result of unobservable disparities in firm characteristics between cross-listed firms and firms without a secondary listing. I further examine heterogeneity in abnormal returns within the group of cross-listed firms and provide evidence for a link between trading activity in the U.S. market and abnormal returns of cross-listed firms around sovereign rating announcements. Several proxies for the amount of (private) information incorporated in U.S. share prices such as trading volume and price nonsynchronicity are determinants of abnormal return behavior for cross-listed firms around sovereign rating announcements. Ownership of cross-listed U.S. shares by more informed investors such as institutional investors similarly reduces price sensitivity to these events for cross-listed firms. In addition, I examine the lead-lag relationship between returns of cross-listed U.S. shares and the underlying home market shares and document information spillovers from the U.S. to the home market shares in the period prior to a sovereign rating announcement. These findings suggest that information revealed by credit rating agencies is for the most part already priced for cross-listed firms. Thus, they benefit from more informative stock prices as a result of informed trading on U.S. exchanges. These results provide an information based rather than corporate governance related explanation for the observed value premium of cross-listed firms.

This dissertation examines how diversification in firms and banks affects the efficiency of capital allocation. In the first chapter, I focus on multinational firms and geographical diversification. I show that there are important differences between industrial and geographical diversification with associated efficiency effects. Using a unique sample of 212 UK multinational firms and 4,676 subsidiaries, I show that multinational firms attract, on average, a global diversification premium of approximately 16% compared with local non-multinational firms, and that on average better corporate governance practices explain roughly one-third of the value premium. The results suggest that multinational firms are compensated for exporting good corporate governance through global diversification. In the second chapter, I examine how banks' ability to diversify affects the efficiency of allocation in the real economy. I document that the deregulation of bank branching restrictions in the United States triggered a reallocation across sectors. In particular, the reallocation can be explained by mean-variance portfolio theory applied to sectoral returns: the realized sectoral allocation of output at the state level converges towards this benchmark allocation, at a rate that is hastened following the deregulation. The result is particularly strong in sectors characterized by young, small and external finance dependent firms, and for states that have a larger share of such sectors. The results suggest that improving bank access to branching affects sectoral specialization (or diversification) of output. The final chapter is a theoretical investigation into the allocation of capital within a multidivisional firm. I show that ex-post efficient capital allocation in an internal capital market may destroy incentives, resulting in value destruction. Specifically, even where agents are assumed to behave efficiently, competition for resources may decrease efficiency where divisions are sub-optimally grouped together. The implication is that firms that exhibit a diversification discount may not be inefficient in the traditional sense, but that even when the firm is being run optimally a diversification discount persists.

This thesis analyzes how firms make capital strucure and corporate investment decisions when there are imperfections in firms' financing activities. This thesis consists of two studies. In Chapter 2, I develop a model nesting two existing theories for why non-fundamental stock price movements affect corporate investment. In the financing-constraint theory. a non-fundamental increase in stock price relaxes financing constraints, thereby increasing investment. In the market-driven theory, managers use the current stock price to compute the cost of capital. Therefore, a non-fundamental increase in stock price raises investment via discount factors. I test the model on a panel of US firms. I find support for the financing-constraint theory but none fror the inarket-driven theory. Controlling for the endogeneity of financing constraints to non-fnndarnental stock price movements is crucial: spurious support for the market-driven theory obtains, absent this control but disappears once I add it. Finally, I expect shareholders with long (short) horizons to favor investment as in the financing-constraint (market-driven) theory. Consistent with this. I find partial support for the market-driven theory for firms in which shareholders have short horizons. In Chapter 3, a central tradeoff in the efficiency of a bankruptcy code is considered. This tradeoff concerns the possibility of too many continuations, if the code is equityholder-friendly versus too many liquidations if the code is creditor-friendly. We provide evidence that firm-level leverage is affected by this tradeoff, as measured by the anticipated deadweight cast from liquidating the firm under the applicable bankruptcy code. In particular. we relate variation in firm leverage to time-series and cross-country variation in bankruptcy codes. Both the time-series and the cross-sectional evidence lend support to the hypothesis that firms use capital Structure as am earns to unwind the inefficiency of bankruptcy codes.

This thesis consists of three studies examining the interaction between market participant behaviour and equity market dynamics. Chapter 2 examines the relationship between sell-side analysts and investors in the presence of repeated interaction and trade generation incentives. I find that optimistic analysts generate more trade for their brokerage firms, as do high reputation analysts. Sell-side analysts face a conflict between telling the truth to build their reputation, and misleading investors to generate short-term increases in commission. When the investor is unsure of the analyst's type and when short sales constraints are present, I show using a simple model that equilibrium forecast optimism can exist, even when investment-banking affiliations are removed. Chapter 3 examines the behaviour of individual investors. Behavioural models generally assume that investment decisions of irrational investors aggregate in a systematic way. Using a unique dataset of individual investor trades I find aggregate individual investor trades exhibit strong systematic patterns, including negative feedback trading and substantial persistence. In addition the trades of a large number of independent retail brokerage firms are highly contemporaneously correlated. However I do not find that the net trades of retail investors consistently predict future returns in a negative fashion. While small investors do act in a highly systematic fashion, their actions may not, at least in the short run, be classed as irrational. Chapter 4 examines the behaviour of individual and institutional investors to assess whether there is evidence of noise trader risk in a broad equity market context. I find that increases in institutional participation are associated with future excess volatility and excess correlations between stocks. I also find evidence of a significant priced noise trader factor in returns. I conclude that there is evidence of noise trader risk, however this risk is not associated with individual investors, but instead with institutional investors. I argue that institutional frictions are a much more plausible source of noise trader risk than is individual investor sentiment.

A review of the normative literature, in the field of Information Technology (IT)/ Information System (IS) justification, examines how organisations evaluate their investments in Manufacturing Resource Planning (MRPII). This is achieved through investigating the issues surrounding capital budgeting, with a particular focus on investment appraisal. In doing so, a novel taxonomy of generic appraisal techniques is proposed. This taxonomy identifies a number of methods for appraising MRPII investments, and through describing these techniques, a classification is offered that identifies their respective characteristics and limitations. In doing so, it becomes clear that although many of the benefits and savings resulting from MRPII are suitable for inclusion within traditional accountancy frameworks, it is their intangible and non-financial nature, together with a range of indirect project costs that confuse the justification process. These factors, together with a range of human and organisational implications, that further complicate the decision making process are also identified. Hence, it appears through a critical review of the literature that many companies are unable to assess the implications of their MRPII investments, thus amounting to a myopic appraisal process that focuses on the analysis of those benefits and costs that are financially quantifiable. In acknowledging the limitations of traditional appraisal techniques, a conceptual model for IT/IS investment evaluation is proposed, which is underpinned by research hypotheses. To test the validity of the proposed hypotheses, a robust novel research methodology is then developed. In doing so, an interpretivist stance is adopted, which favours the use of qualitative research methods during a multiple case enquiry. Whilst conducting the empirical research, it soon emerged that the hypotheses represented significant factors for consideration within the presented model. As a result, such constructs now establish themselves as integral parts within a structured evaluation process. However, during the empirical research, complementary evaluation criteria also emerged, which resulted in modifications being made to the previously presented conceptual model. In doing so, culminating in the development of descriptive MRPII evaluation criteria and a model, which provides investment decision makers with novel frames of reference during the evaluation of MRPII investment proposals.