Type of Document Dissertation Author Krieger, Kevin Author's Email Address email@example.com URN etd-04162009-092049 Title Essays in Corporate Finance Degree Doctor of Philosophy Department Finance, Department of Advisory Committee
Advisor Name Title James Ang Committee Chair Bruce Haslem Committee Member Yingmei Cheng Committee Member Xufeng Niu Outside Committee Member Keywords
- Dividend Sources
- Executive Motivation
Date of Defense 2009-02-25 Availability unrestricted AbstractThis dissertation examines two underdeveloped topics in the field of corporate finance. In the first chapter, I detail the impact of expectations on the performance of firms under the leadership of new CEOs. I seek to answer the heretofore untested question of whether greater pressure motivates new CEOs to succeed, encourages them to engage in manipulative behaviors, or both.
I show that new CEOs with greater expectations are significantly more likely to report superior achievement. However, after possible manipulation is accounted for, this superiority is reduced to insignificant levels. I conclude that while a small motivational effect of expectations may exist, spurring some new CEOs to perform, the strongest impact of heightened expectations for new CEOs is an increased likelihood to artificially inflate performance measures for the sake of appearance.
In the second chapter, I question whether the marketís response to the announcement of significantly increased dividends depends on the future free cash flows, realized by the firm, which may prove to be susceptible to agency costs.
I consider the marketís reaction to the announcement of substantial dividend hikes and find this reaction is not tied to the future free cash flows of the firm; however, I also find that the reaction is strongly linked to the excess cash balance of the firm in the year of the dividend increase. I contend the market attempts to consider agency costs when evaluating new dividends, but in doing so it fails to look beyond the firmís current cash situation.
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