Theses and Dissertations

Date of Award

8-1-2024

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Finance

First Advisor

Ahmed Elnahas

Second Advisor

Siamak Javadi

Third Advisor

Yu Liu

Abstract

This dissertation consists of two essays on corporate finance. In my first essay, I investigate the effect of the top management team (TMT) political heterogeneity on the CEO’s ability to implant her/his ideology onto the firm’s CSR policies. We present evidence that a CEO’s ideology can shape CSR policies only in the existence of a politically homogeneous TMT. This result is robust to the use of the propensity score matching (PSM) approach to address selection bias, the instrumental variable (IV) approach to address endogeneity, and Oster’s test to address omitted variables bias. Further analysis shows that the association between CSR and firm value is contingent on the degree of TMT political heterogeneity. Specifically, shareholders seem to benefit from CSR initiatives only when they receive the full support of both CEOs and members of the TMTs. The inability of CEOs to solely shape corporate decisions extends to other policies including capital structure, cash holdings, and research and development. In my second paper, I investigate the impact of the top management team (TMT) political diversity, which can create both synergies and conflicts, on firm innovation. Using a variety of measures of firm innovation that include patent quantity and quality, academic publications, as well as research and development (R&D) expenses, we present strong evidence in support of the synergy hypothesis that TMT political diversity boosts firm innovation. These results are robust to using the propensity score matching (PSM) approach to address selection bias and the control of varying CEO characteristics including power, gender, tenure, age, and political affiliation. These results are also robust to using the instrumental variable (IV) approach to address endogeneity, and Oster’s test to address omitted variables bias. Our results show that top management team diversity can boost firm innovation's effect on firm value.

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Copyright 2024 Yongdong Wang. https://proquest.com/docview/3098446070

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