Two Essays on Corporate Finance and Mutual Funds
兩篇關於公司金融和共同基金的論文
Student thesis: Doctoral Thesis
Author(s)
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Detail(s)
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| Award date | 4 Jul 2024 |
Link(s)
| Permanent Link | https://scholars.cityu.edu.hk/en/theses/theses(c946b6c1-a3fe-4fc6-ab8d-b4cfb4b9f742).html |
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| Other link(s) | Links |
Abstract
This dissertation investigates the research field of corporate finance and mutual funds and is composed of two essays. One examines the impact of the directors’ disaster experience on corporate environmental performance. The other studies the relationship between corporate charitable donations and mutual funds portfolio allocation.
The first essay focuses on directors’ recent experience of extreme weather and corporate environmental performance. We study whether directors’ recent disaster experience affects corporate environmental performance. Using a difference-in-differences design, we find that after directors experience natural disasters at an interlocking firm, the focal firm demonstrates improvements in its environmental performance over the subsequent years. This effect is stronger when affected directors are in better positions to promote environmentally friendly policies, and is more pronounced (i.e., two times larger) for female directors. We find similar results when using disaster shocks in directors’ areas of residence. Our overall analysis suggests that personal experience with extreme weather affects directors’ beliefs in climate change risk and consequently corporate sustainability policy.
The second essay is co-authored with Dr. ASAMOAH Prince Elvis. We document that mutual fund managers are more likely to allocate assets to non-local firms engaged in charitable donations in the same state as the funds’ headquarters. We find that this bias is mainly driven through the channel of local favoritism. This effect is influenced by firms’ political affiliations and the presence of their establishments or subsidiaries. Media coverage and social attention play a critical role in drawing managerial attention to these actions. We address endogeneity using the difference-in-differences approach. The charitable donation bias is significant only in the first year following the firm’s engagement and is less pronounced in larger and older funds. Overall, our findings indicate the existence of a short-lived charitable donation bias in fund portfolio allocations.
The first essay focuses on directors’ recent experience of extreme weather and corporate environmental performance. We study whether directors’ recent disaster experience affects corporate environmental performance. Using a difference-in-differences design, we find that after directors experience natural disasters at an interlocking firm, the focal firm demonstrates improvements in its environmental performance over the subsequent years. This effect is stronger when affected directors are in better positions to promote environmentally friendly policies, and is more pronounced (i.e., two times larger) for female directors. We find similar results when using disaster shocks in directors’ areas of residence. Our overall analysis suggests that personal experience with extreme weather affects directors’ beliefs in climate change risk and consequently corporate sustainability policy.
The second essay is co-authored with Dr. ASAMOAH Prince Elvis. We document that mutual fund managers are more likely to allocate assets to non-local firms engaged in charitable donations in the same state as the funds’ headquarters. We find that this bias is mainly driven through the channel of local favoritism. This effect is influenced by firms’ political affiliations and the presence of their establishments or subsidiaries. Media coverage and social attention play a critical role in drawing managerial attention to these actions. We address endogeneity using the difference-in-differences approach. The charitable donation bias is significant only in the first year following the firm’s engagement and is less pronounced in larger and older funds. Overall, our findings indicate the existence of a short-lived charitable donation bias in fund portfolio allocations.
