상세정보

This dissertation consists of three essays focusing on the corporate investment decisions and activities. In chapter 1, the paper investigates the effects of credit ratings on corporate merger and acquisition activities. Credit ratings of firms rated by a rating agency can indicate its ability to raise debt and its financial constraint; in addition, credit rating agencies play a monitoring role for managers and mitigate information asymmetry problems by producing and delivering information in the debt market. We produced three main findings. First, rated firms are more likely to participate in M&As. Our results show that rated firms are more likely to be bidders or targets than are non-rated firms. Specifically, these results are more pronounced when firms are in information asymmetry problems. Second, the rating level affects the probability of being a target. The rated firm with a very low rating has a high default risk, and the rated firm is more financially distressed. Third, we found that the relationship between the credit rating level and bidders’ CAR is an adverse U-shape. This study contributes to the empirical literature on credit ratings and firms’ investment decisions.
Chapter 2 documents how the threat of a downgrade to speculative grade affects corporate investment decisions. This paper finds that, as rating levels for corporate bonds improve, firms tend to increase capital investment, but this positive relationship is reduced or changed negatively with at or near BBB ratings in Korea. These results support the threat of downgrading to speculative-grade discipline managers with overinvestment preferences or overconfidence. When managers do not have overinvestment preference or overconfidence, the effect of investment-grade cut-offs disappears or decreases. This study has implications for research on credit ratings and investment decisions and studies on behavioral corporate finance.
Chapter 3 notes the owner’s cash preference behavior and the level of ownership that strengthens the behavior. Ownership concentration can decrease principal-agent conflicts but increase principal-principal conflicts. Owners who value their control prefer cash payments for M&A transactions. The preference is likely for their private interests. This paper finds that the joint effects of ownership concentration and cash-only payment on bidders’ announcement returns are negative and statistically significant. Interestingly, the ownership concentration shows a positive relationship with the bidders’ announcement returns when they do not choose cash-only payments, or their ownership is not intermediate. This paper presents evidence to grasp how the relationship between the ownership concentration and the agent problem affects M&A.

Contents

Chapter 1. A Study on the Effect of Credit Ratings on M&A Activity
1. Introduction 	2
2. Literature review and Hypothesis 	4
	   2.1 Information effect 	4
2.2 Financial constraints 	5
2.3. Hypothesis for acquirer	6
2.4. Hypothesis for target 	8
3. Sample and Statistics 	9
4. Results 	10
4.1. Credit ratings and the possibility of becoming a bidder 	10
4.2. Effects of rating levels on bidders’ CAR 	12
4.3. Additional test for bidder 	13
4.4. Effect of credit ratings on possibility of a becoming target 	15
5. Robustness 	15
6. Conclusion 	16
References 	17

Chapter 2.  A study on Investment grade cut-offs and Manager’s investment behavior
1. Introduction 	32
2. Literature review and hypothesis 	35
2.1 Credit ratings and investment decisions 	35
2.2 Downgraded credit ratings 	36
2.3 Hypothesis 	37
3. Empirical design 	41
3.1 Sample selection 	41
3.2 Variables	42
3.3 Methodology 	43
4. Empirical results 	48
4.1 Summary statistics 	48
4.2 Do the investment-grade cut-offs affect firms’ capital investment? 	49
4.3 Regression using other rating intervals 	51
4.4. Real threat of a downgrade 	52
4.5 Manager’s behavior and investment grade cut-offs 	57
4.6 Manager’s precautionary motive 	59
5. Robustness 	60
5.1 Endogeneity Isuue 	60
5.2 Results for the rank biserial correlation for each credit rating dummy 	62
5.3 Results for the non- and semi-parametric tests 	64
6. Conclusion 	65
References 	67

Chapter 3. The effects of Ownership concentration and Owner’s behavior on M&A
1. Introduction 	97
2. Literature Review 	100
2.1 Agency problem and Ownership 	101
2.2 Agency problems and M&A 	102
2.3 Owners’ cash payment preference in M&A transaction 	103
2.5 Cash payment and financial constraints 	103
3. Hypothesis 	104
4. Methodology 	106
5. Data and Variables 	110
5.1. Data 	110
5.2. Measurement of Ownership Concentration 	111
5.3. Control Variables 	112
5.4. Descriptive statistics and univariate comparisons 	113
6. Empirical Results 	116
6.1 Results for Hypothesis 1  	116
6.2 Results of Hypothesis 2  	120
6.3 Results of Hypothesis 3  	122
7. Robustness 	123
7.1 non-linear relationship 	123
7.2 Endogeneity Issue 	124
8. Conclusions 	126
Reference 	128

Abstract in Korean (국문초록) 	148