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Three essays on corporate govemance

English Abstract

Abstract This thesis consists of three essays on corporate governance. Particularly, the first essay examines whether the impact of CEO cultural background affects firm cash holdings. We find that CEOs with a cultural background that emphasizes power- distance and uncertainty avoidance tend to increase corporate cash holdings, while CEOs with a cultural background that emphasizes masculinity tend to reduce corporate cash holdings. Further analyses show that the impact of CEO cultural background is more pronounced when the power is concentrated among the top executives, when the CEO has degrees of discretions to pursue their own goals, and when the information asymmetry is high. Our results are robust to control for potential endogeneity by employing the firm-fixed effect, the difference-in-difference model, and the propensity score matching approach. Our results indicate the vital role of the CEO cultural background in influencing corporate policies. The second essay studies the impacts of external governance on corporate outcomes, namely when both margin trading and short selling were eligible in the Chinese stock market since March 2010. A generalized propensity score (GPS) matching method is used to allow treatment effects to change over time. The empirical findings indicate that the pilot reform positively bolstered stock trading activities and constrained managers' behavior, such as their method of earnings management. We observe that the disclosure policies adopted by managers can influence stock trading activities. Furthermore, this chapter provides several important implications that policymakers may find useful, and our results provide evidence supporting the Chinese Securities Regulatory Commission (CSRC) to allow more firms to join this reform. The third essay examines whether the monitoring role of media coverage of client firms affect audit pricing, using data from US listed firms during 2001—2017. We provide the first evidence that the monitoring role of media coverage can affect audit pricing and can be dominating for certain groups of media coverage depending on tones and types, where audit fee decreases in media coverage. The monitoring effect of media coverage tends to be stronger for period after the SOX, for firms closer to auditor office, and for firms with stronger internal corporate governance. We also show that the classified media coverages influence audit pricing via channels of audit efforts and audit risk. We employ shocks to media coverage specified with tones and types to address endogeneity issues and verify the causal relations. The results are robust to controlling for a large number of firm-level, auditor-level characteristics, and alternative measures of media coverage.

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Loi, Fai Lim


Faculty of Business Administration


Department of Finance and Business Economics




Corporate governance


Qiao, Zhuo

Chen, Jing Han

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