Three essays in dynamic corporate finance

The three essays constituting this thesis focus on financing and cash management policy. The first essay aims to shed light on why firms issue debt so conservatively. In particular, it examines the effects of shareholder and creditor protection on capital structure choices. It starts by building a contingent claims model where financing policy results from a trade-off between tax benefits, contracting costs and agency costs. In this setup, controlling shareholders can divert part of the firms' cash ows as private benefits at the expense of minority share- holders. In addition, shareholders as a class can behave strategically at the time of default leading to deviations from the absolute priority rule. The analysis demonstrates that investor protection is a first order determinant of firms' financing choices and that conflicts of interests between firm claimholders may help explain the level and cross-sectional variation of observed leverage ratios. The second essay focuses on the practical relevance of agency conflicts. De- spite the theoretical development of the literature on agency conflicts and firm policy choices, the magnitude of manager-shareholder conflicts is still an open question. This essay proposes a methodology for quantifying these agency conflicts. To do so, it examines the impact of managerial entrenchment on corporate financing decisions. It builds a dynamic contingent claims model in which managers do not act in the best interest of shareholders, but rather pursue private benefits at the expense of shareholders. Managers have discretion over financing and dividend policies. However, shareholders can remove the manager at a cost. The analysis demonstrates that entrenched managers restructure less frequently and issue less debt than optimal for shareholders. I take the model to the data and use observed financing choices to provide firm-specific estimates of the degree of managerial entrenchment. Using structural econometrics, I find costs of control challenges of 2-7% on average (.8-5% at median). The estimates of the agency costs vary with variables that one expects to determine managerial incentives. In addition, these costs are sufficient to resolve the low- and zero-leverage puzzles and explain the time series of observed leverage ratios. Finally, the analysis shows that governance mechanisms significantly affect the value of control and firms' financing decisions. The third essay is concerned with the documented time trend in corporate cash holdings by Bates, Kahle and Stulz (BKS,2003). BKS find that firms' cash holdings double from 10% to 20% over the 1980 to 2005 period. This essay provides an explanation of this phenomenon by examining the effects of product market competition on firms' cash holdings in the presence of financial constraints. It develops a real options model in which cash holdings may be used to cover unexpected operating losses and avoid inefficient closure. The model generates new predictions relating cash holdings to firm and industry characteristics such as the intensity of competition, cash flow volatility, or financing constraints. The empirical examination of the model shows strong support of model's predictions. In addition, it shows that the time trend in cash holdings documented by BKS can be at least partly attributed to a competition effect.

Three essays in behavioral and experimental economics

The present PhD dissertation consists of three papers, organized in chapters, in the field of behavioral economics. This discipline studies economic behavior of individuals subject to limitations, such as bounded self-interest and bounded willpower. The behavior studied in the present thesis ranges from the complex decision to register as an organ donor, decision¬making in the presence of uncertainty and the decision to give money to a charitable organization. The first chapter aims at testing the effectiveness of an active-decision (AD) mechanism on the decision to become an organ donor in Switzerland, using field experiments. We found that stimulating participants' reflection on the topic of organ donation had a negative effect on the decision to become an organ donor. Moreover, a non-binding commitment nudge reduces putting off the decision, but does not lead to donation rates higher than in the control group. The results suggest that AD may be far more limited than previously thought and raise doubts about the efficacy of engaging potential donors to reflect on the topic of organ donation. Beyond carrying for others, behavioral economics also recognizes that individuals do not evaluate outcomes in absolute terms but rather by comparing them to some reference levels, called reference points. Above the reference points, economic outcomes are perceived as gains, while below these levels the same outcomes are felt as losses. The last two chapters analyze the importance of reference points in the evaluation of economic outcomes. Using a laboratory experiment where subjects played two consecutive lotteries, Chapter 2 studies the speed of adjustment of the reference point. We find that varying the probability of winning the first lottery has no effect on subjects' risk behavior regarding the second lottery. This result indicates a very fast adjustment of the reference point to the latest information. Chapter 3 investigates whether reference points are relevant for charitable preferences. Using actual donation decisions of participants in a laboratory experiment, the results suggest that reference points are not crucial for shaping charitable giving. -- Cette thèse de doctorat consiste en trois articles, organisés en chapitres, dans le domaine de l'économie comportementale. Cette discipline étudie le comportement d'agents économiques sujets à des limitations, telles qu'un égoïsme limité et une volonté limitée. Le comportement étudié dans cette thèse va de la décision complexe de devenir donneur d'organes, la prise de décision en présence d'incertitude à la décision de donner de l'argent à une oeuvre caritative. Le premier chapitre vise à tester l'efficacité d'un mécanisme de « décision active » (active decision, AD) sur la décision de devenir donneur d'organes en Suisse, et ce en recourant à deux expériences hors-laboratoire. Les résultats montrent que stimuler la réflexion des participants sur le don d'organes a un effet négatif sur la décision de devenir donneur. De plus, un mécanisme qui encourage les participants à prendre une décision sur le champ réduit la tendance à procrastiner, mais ne mène pas à un taux de donneurs plus élevé par rapport à un groupe de contrôle. Les résultats suggèrent que le mécanisme AD est bien plus limité que ce qui a été supposé jusqu'à maintenant. De plus, ils suscitent le doute quant à l'efficacité de stimuler la réflexion de potentiels donneurs sur le sujet du don d'organes. En plus de se soucier des autres, l'économie comportementale admet également que les individus n'évaluent pas les résultats de façon absolue, mais en comparant ceux-ci à des niveaux de références, souvent appelés points de référence. Au-dessus de ces points de référence, les résultats sont perçus en tant que gains, tandis qu'en-dessous ces mêmes résultats sont considérés comme des pertes. Les deux derniers chapitres analysent l'importance des points de référence dans diverses situations. A l'aide d'une expérience en laboratoire dans laquelle les participants participent à deux loteries consécutives, le chapitre 2 étudie la vitesse d'ajustement du point de référence. Le résultat montre que varier la probabilité de gagner la première loterie n'a aucun effet sur le comportement en matière de risques concernant la deuxième loterie. Cela indique un ajustement très rapide du point de référence. Le chapitre 3 vise à déterminer si les points de référence ont un rôle majeur concernant les préférences caritatives. Les données relatives aux décisions de don des participants d'une expérience en laboratoire montrent que les points de référence n'influencent pas significativement le don caritatif.

Contrast : a concept in language and its development in Medieval Spanish

The purpose of this PhD thesis is to investigate a semantic relation present in the connection of sentences (more specifically: propositional units). This relation, which we refer to as contrast, includes the traditional categories of adversatives - predominantly represented by the connector but in English and pero in Modern Spanish - and concessives, prototypically verbalised through although / aunque. The aim is to describe, analyse and - as far as possible - to explain the emergence and evolution of different syntactic schemes marking contrast during the first three centuries of Spanish (also referred to as Castilian) as a literary language, i.e., from the 13th to the 15th century. The starting point of this question is a commonplace in syntax, whereby the semantic and syntactic complexity of clause linkage correlates with the degree of textual elaboration. In historical linguistics, i.e., applied to the phylogeny of a language, it is commonly referred to as the parataxis hypothesis A crucial part of the thesis is dedicated by the definition of contrast as a semantic relation. Although the label contrast has been used in this sense, mainly in functional grammar and text linguistics, mainstream grammaticography and linguistics remain attached to the traditional categories adversatives and concessives. In opposition to this traditional view, we present our own model of contrast, based on a pragma-semantic description proposed for the analysis of adversatives by Oswald Ducrot and subsequently adopted by Ekkehard König for the analysis of concessives. We refine and further develop this model in order for it to accommodate all, not just the prototypical instances of contrast in Spanish, arguing that the relationship between adversatives and concessives is a marked opposition, i.e., that the higher degree of semantic and syntactic integration of concessives restricts some possible readings that the adversatives may have, but that this difference is almost systematically neutralised by contextual factors, thus justifying the assumption of contrast as a comprehensive onomasiological category. This theoretical focus is completed by a state-of-the-question overview attempting to account for all relevant forms in which contrast is expressed in Medieval Spanish, with the aid of lexicographic and grammaticographical sources, and an empirical study investigating the expression of corpus in a corpus study on the textual functions of contrast in nine Medieval Spanish texts: Cantar de Mio Cid, Libro de Alexandre, Milagros de Nuestra Sehora, Estoria de Espana, Primera Partida, Lapidario, Libro de buen amor, Conde Lucanor, and Corbacho. This corpus is analysed using quantitative and qualitative tools, and the study is accompanied by a series of methodological remarks on how to investigate a pragma-semantic category in historical linguistics. The corpus study shows that the parataxis hypothesis fails to prove from a statistical viewpoint, although a qualitative analysis shows that the use of subordination does increase over time in some particular contexts.

Identification of two novel mutations in CDHR1 in consanguineous Spanish families with autosomal recessive retinal dystrophy.

Inherited retinal dystrophies present extensive phenotypic and genetic heterogeneity, posing a challenge for patients' molecular and clinical diagnoses. In this study, we wanted to clinically characterize and investigate the molecular etiology of an atypical form of autosomal recessive retinal dystrophy in two consanguineous Spanish families. Affected members of the respective families exhibited an array of clinical features including reduced visual acuity, photophobia, defective color vision, reduced or absent ERG responses, macular atrophy and pigmentary deposits in the peripheral retina. Genetic investigation included autozygosity mapping coupled with exome sequencing in the first family, whereas autozygome-guided candidate gene screening was performed by means of Sanger DNA sequencing in the second family. Our approach revealed nucleotide changes in CDHR1; a homozygous missense variant (c.1720C > G, p.P574A) and a homozygous single base transition (c.1485 + 2T > C) affecting the canonical 5' splice site of intron 13, respectively. Both changes co-segregated with the disease and were absent among cohorts of unrelated control individuals. To date, only five mutations in CDHR1 have been identified, all resulting in premature stop codons leading to mRNA nonsense mediated decay. Our work reports two previously unidentified homozygous mutations in CDHR1 further expanding the mutational spectrum of this gene.

Three Essays on International Trade and the Labor Market

The thesis is made of three independent chapters interested in the impact of globalization on workers in industrialized countries. The dissertation is especially focused on identifying the causal impact of international trade on workers' mobility, wages, and employment with both a short- and medium-term perspective. The first paper explores the relation between intra-industry trade (IIT) expansion and associated worker flows, taking the latter as an indicator of labor-market adjustment costs. Being the first study to combine theoretical simulations and a novel identification strategy, we find that both theoretical and empirical analyses are consistent with the "smooth adjustment hypothesis", according to which IIT expansion is less disruptive than inter-industry trade expansion. The study therefore lends support to the use of IIT indices as first-pass proxies for the adjustment effects of trade expansion. The second chapter contrasts the impact of increased import competition coming from China and the European Union (EU) on workers in the United Kingdom over a 15-year period. The most salient findings show that increased imports from China had significantly negative effects on workers' earnings, wages and employment. In contrast, larger imports from the EU are associated with positive worker-level outcomes, which is largely explained by the fact that increased imports from the EU were mostly offset by increased same-industry exports to the EU. Besides, we find that increased imports from China exert additional pressure on workers through spillovers to employment and wages in downstream industries. Finally, the last chapter is focused on the impact of exposure to trade and real exchange rate shocks on wages for Swiss manufacturing workers. A particular attention is made to consistently estimate the causal effect in using a two-step gravity-type identification strategy. The study shows that the impact of trade and exchange rate movements is concentrated among high-skilled workers almost exclusively.

Personality effects and sex differences on the international affective picture system (IAPS) : a Spanish and Swiss study

The present study analyses the relationship between Anxiety and Impulsivity personality factors and emotions, by controlling for country and sex effects in a sample of Spanish and Swiss university students. Emotions were assessed through the International Affective Picture System (IAPS) of pictures (valence/arousal) using the Self-Assessment Manikin (SAM) procedure. The mixed valence/arousal groups' pictures were formed according to Tok, Koyuncu, Dural and Catikkas procedure (2010). Results showed that females scored significantly higher in Anxiety factor and men in Impulsivity factor in both countries. The effect of sex was highly significant for Anxiety (ŋ2: 0.12), but there was no significant effect of the country. Also, females obtained higher scores in the four valence/arousal pictures groups. The sex effect was particularly robust for negative valence-high arousal (ŋ2: 0.13). Impulsivity correlated with high ratings of positive valence-high arousal while Anxiety correlated with high ratings of negative valence-high arousal and with high ratings of negative valence-low arousal in both sexes, although scores were higher for females. Structural Equation Modelling confirmed these relationships. Nevertheless, Anxiety and Impulsivity explained only a small amount of the accounted variance of the self-reported valence and arousal of the pictures.

Essays on the Economics of Conflict and Migration

Les conflits civils sont des événements dramatiques qui poussent les individus hors de leurs pays d'origine. Mais si l'émigration était elle-même une force pacificatrice? Dans les deux premiers chapitres, je me suis intéressée à l'impact de l'émigration sur l'incidence des conflits civils dans les pays d'origine. Tout d'abord, je construis un modèle théorique d'équilibre général, dans lequel le niveau de conflit d'équilibre est déterminé par la ratio de combattants dans l'économie. Dans ce modèle, l'émigration décourage les conflits en réduisant les gains d'une rébellion, tout en augmentant le coût d'opportunité des combats. La principale prédiction du modèle est que le conflit diminue avec le niveau du salaire étranger net des coûts de migration. Dans le deuxième chapitre, je teste cette prédiction empiriquement. En utilisant une variable instrumentale, je démontre que l'émigration vers les pays développés diminue l'incidence de guerres civiles dans les pays d'origine. Ces résultats prouvent qu'en ouvrant leurs frontières, les pays d'accueil pourraient contribuer à sauver des vies, aussi bien celles des migrants que celles des habitants restés dans leur pays. De plus, les conflits civils tendent à détruire des sociétés en traumatisant les personnes touchées, augmentant ainsi le risque des conflits futurs. Afin de mieux comprendre ce cercle vicieux et de pouvoir y remédier, le troisième chapitre détermine si les enfants ayant vécu la guerre ont une tendance à être plus violent que des co-nationaux nés après la guerre. L'analyse se concentre sur les demandeurs d'asile en Suisse : Cette population est intéressante puisque l'allocation des demandeurs d'asile entre cantons est aléatoire, ce qui prévient le choix d'un canton avec un taux de criminalité plus élevé. Les résultats démontrent un effet de traumatisme causé par la guerre augmentant ainsi le risque de criminalité dans la vie adulte. Cependant, l'analyse de politiques publiques montre que la mise en place de politiques judicieuses permet d'éviter les conséquences de l'exposition à la guerre. En particulier, en offrant aux nouveaux arrivants l'accès au marché de travail ainsi que des perspectives à long-terme, la Suisse peut éliminer complètement l'effet du traumatisme sur la criminalité.