Solidarity, the network and the history of workers' self-management from the Gdańsk Agreement to shock therapy

This PhD thesis is an empirical research project in the field of modern Polish history. The thesis focuses on Solidarity, the Network and the idea of workers’ self-management. In addition, the thesis is based on an in-depth analysis of Solidarity archival material. The Solidarity trade union was born in August 1980 after talks between the communist government and strike leaders at the Gdansk Lenin Shipyards. In 1981 a group called the Network rose up, due to cooperation between Poland’s great industrial factory plants. The Network grew out of Solidarity; it was made up of Solidarity activists, and the group acted as an economic partner to the union. The Network was the base of a grass-roots, nationwide workers’ self-management movement. Solidarity and the self-management movement were crushed by the imposition of Martial Law in December 1981. Solidarity revived itself immediately, and the union created an underground society. The Network also revived in the underground, and it continued to promote self-management activity where this was possible. When Solidarity regained its legal status in April 1989, workers’ self-management no longer had the same importance in the union. Solidarity’s new politico-economic strategy focused on free markets, foreign investment and privatization. This research project ends in July 1990, when the new Solidarity-backed government enacted a privatization law. The government decided to transform the property ownership structure through a centralized privatization process, which was a blow for supporters of workers’ self-management. This PhD thesis provides new insight into the evolution of the Solidarity union from 1980-1990 by analyzing the fate of workers’ self-management. This project also examines the role of the Network throughout the 1980s. There is analysis of the important link between workers’ self-management and the core ideas of Solidarity. In addition, the link between political and economic reform is an important theme in this research project. The Network was aware that authentic workers’ self-management required reforms to the authoritarian political system. Workers’ self-management competed against other politico-economic ideas during the 1980s in Poland. The outcome of this competition between different reform concepts has shaped modern-day Polish politics, economics and society.

Essays in corporate finance

China has been growing rapidly over the last decades. The private sector is the driving force of this growth. This thesis focuses on firm-level investment and cash holdings in China, and the chapters are structured around the following issues. 1. Why do private firms grow so fast when they are more financially constrained? In Chapter 3, we use a panel of over 600,000 firms of different ownership types from 1998 to 2007 to find the link between investment opportunities and financial constraints. The main finding indicates that private firms, which are more likely to be financially constrained, have high investment-investment opportunity sensitivity. Furthermore, this sensitivity is relatively lower for state-owned firms in China. This shows that constrained firms value investment opportunities more than unconstrained firms. To better measure investment opportunities, we attempt to improve the Q model by considering supply and demand sides simultaneously. When we capture q from the supply side and the demand side, we find that various types of firms respond differently towards different opportunity shocks. 2. In China, there are many firms whose cash flow is far greater than their fixed capital investment. Why is their investment still sensitive to cash flow? To explain this, in Chapter 4, we attempt to introduce a new channel to find how cash flow affects firm-level investment. We use a dynamic structural model and take uncertainty and ambiguity aversion into consideration. We find that uncertainty and ambiguity aversion will make investment less sensitive to investment opportunities. However, investment-cash flow sensitivity will increase when uncertainty is high. This suggests that investment cash flow sensitivities could still be high even when the firms are not financially constrained. 3. Why do firms in China hold so much cash? How can managers’ confidence affect corporate cash holdings? In Chapter 5, we analyse corporate cash holdings in China. Firms hold cash for precautionary reasons, to hedge frictions such as financing constraints and uncertainty. In addition, firms may act differently if they are confident or not. In order to determine how confidence shocks affect precautionary savings, we develop a dynamic model taking financing constraints, uncertainty, adjustment costs and confidence shocks into consideration. We find that without confidence shocks, firms will save money in bad times and invest in good times to maximise their value. However, if managers lose their confidence, they tend to save money in good times to use in bad times, to hedge risks and financing constraint problems. This can help explain why people find different results on the cash flow sensitivity of cash. Empirically, we use a panel of Chinese listed firms. The results show that firms in China save more money in good times, and the confidence shock channel can significantly affect firms’ cash holdings policy.

Corporate governance and cost of capital: evidence from Pakistani listed firms

This thesis investigates the effectiveness of Corporate Governance (CG) reforms in Pakistan. Using a sample of 160 Pakistani firms from 2003 to 2013 and governance data collected manually from the annual reports, this thesis investigates seven closely related and important corporate issues that are related to the compliance of governance rules. Specifically, it aims to : (i) investigate the degree of CG compliance with 2002 Pakistani Code of CG (PCCG); (ii) determine whether the introduction of 2002 PCCG has improved Pakistani CG practices; (iii) investigate the determinants of CG compliance and disclosure for Pakistani listed firms; (iv) test the nexus between CG compliance with the 2002 PCCG and firms’ cost of capital (COC); (v) investigate the impact of different individual CG mechanisms on listed firms COC; (vi) examine how different ownership structures impact on firms’ COC; and (vii) analyse relationship between CG structures and Cost of Equity (COE) as well as Cost of Debt (COD) for Pakistani listed firms. These empirical investigations report some important results. First, the reported findings suggest that Pakistani firms have responded positively to governance disclosure requirements over the eleven year period from 2003 to 2013. The results also show that the introduction of the PCCG in 2002 has improved CG standards by Pakistani listed firms. Second, the reported results related to the determinants of CG compliance demonstrate that significant and positive association between institutional, government and foreign ownership with CG compliance. However, findings relating to the determinants of CG compliance show a negative and significant association between board size and block ownership with CG compliance and disclosure. The study finds no significant relationship between director ownership, audit firm size and the presence of female board members with the constructed Pakistan Corporate Governance Index (PCGI). Third, the investigation on the relationship between CG and COC report a significantly negative nexus between PCGI and firms’ COC. The investigation on the association between ownership structures and COC report a negative and significant nexus between block ownership with firms’ COC. Further, a number of robustness analyses performed in this study suggest that the empirical results reported in this study are generally robust to the alternative CG variables, alternative COC variables and potential endogeneity problems.