Date of Award

Spring 5-2016

Degree Type


Degree Name


Degree Program

Financial Economics


Economics and Finance

Major Professor

Tarun Mukherjee; Atsuyuki Naka

Second Advisor

Mohammad K. Hassan

Third Advisor

Wei Wang

Fourth Advisor

Duygu Zirek


In the first chapter, we assess the effect of changes of government ownership on corporate innovation activities. Across 58 non-US countries, treatment firms’ innovation, both in quantity and quality, decrease after a governmental acquisition by using a difference-in-difference regressions and propensity score matching. We show that there is conflict of interest between major shareholders and minor shareholders. The corporate innovation efficiency also decline after the government acquisition. We find that this negative relationship is more severe for the group with higher government ownership of banks, better creditor rights and worse stock market development.

For second chapter, if the optimal capital structure exists, an overleveraged firm is expected to move towards the target structure by taking actions that would lower the leverage. Many previous studies, however, show that leverage-decreasing transactions, including offering stocks in exchange of bonds, are meted out with negative market reactions, suggesting deficiencies of the trade-off theory in explaining this phenomenon. In this paper we hypothesize and show that the negative market reactions might be attributed to incorrect rebalancing by poorly-governed firms in the under-leverage domain, who instead of increasing leverage are purposely engaged in leverage-reducing activities.


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