«Essays on Empirical Corporate Finance»
On Monday 29 August 2022 Michael Axenrod will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.
Prescribed topic for the trial lecture:
«Capital structure choice and financing decisions»
Trial lecture:
AUD C, NHH - 10:15-11:00, NHH
Title of the thesis:
«Essays on Empirical Corporate Finance»
Summary:
Corporations often struggle to handle financial constraints in corporate financing decisions.
This thesis consists of three empirical studies, each of them illustrating how financial constraints influence corporate decision-making.
Defined benefit (DB) pension plans create substantial on- and off-balance sheet leverage positions and contribute to tightening corporate financial constraints. Axenrods first paper highlights the product market implications of the corporate decision to freeze such plans, thereby investigating an important trade-off corporations face: A freeze reduces financial constraints, but it may also signal financial distress to the competition. Indeed, the results indicate product market advantages for corporations that freeze DB plans relative to competitors that continue to sponsor DB plans, except if freezers are in financial distress.
In the second paper (co-authored with Michael Kisser), he investigates whether mandatory recognition of previously disclosed off-balance sheet liabilities affects corporate capital structure decisions. SFAS 158 requires sponsors of DB plans to recognize the level of pension and healthcare plan funding explicitly on the balance sheet. They show that DB plan sponsors with high off-balance sheet liabilities decrease financial leverage following SFAS 158. Thus, the mandatory financial statement recognition was sufficiently costly to warrant a change in corporate funding decisions.
The third paper (co-authored with Carsten Bienz, Francesca Cornelli, and Jing Lan) focuses on the role of cornerstone investors in an initial public equity offering (IPO). Such investors pre-commit to purchasing shares during an IPO. Their paper suggests that this pre-commitment may increase the likelihood of IPO success, as it may signal early demand for the IPO. On the other hand, such a pre-commitment is likely costly and may decrease price efficiency. Indeed, we find that cornerstone investors increase the probability of IPO success through higher share demand during book-building. On the other hand, cornerstone investors are compensated through higher underpricing and nearly full share allocation.
Defense:
12:15 – 14:00 Aud C, NHH
Members of the evaluation committee:
Professor Tore Leite (leader of the committee), Department of Finance, NHH
Associate Professor Divya Anantharaman, Rutgers Business School
Associate Professor Kizkitza Biguri, Oslo met
Supervisors:
Associate Professor Michael Kisser (main supervisor), Norwegian Business School BI and adjunct professor at NHH
Associate Professor Hun Lee Kyeong, Department of Finance, NHH
The trial lecture and thesis defense will be open to the public.