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Title: Three essays on corporate finance
Authors: Jin, Yaling
Keywords: Business::Finance::Corporate finance
Issue Date: 2022
Publisher: Nanyang Technological University
Source: Jin, Y. (2022). Three essays on corporate finance. Doctoral thesis, Nanyang Technological University, Singapore.
Abstract: This dissertation consists of three essays. The first essay utilizes the staggered changes in corporate income tax rates across U.S. states as a quasi-natural experiment and examines the impact of corporate taxes on corporate social responsibility (CSR). It has two main findings: First, firms’ CSR performance significantly improves following tax cuts, suggesting that firms rely on internal funds for CSR investments. Second, tax increases have an insignificant effect on firms’ CSR performance, implying that CSR commitments are sticky on the upside. Further tests show that the effect of tax decreases on CSR is more pronounced for firms with greater tax exposure, tighter financial constraints, or stronger prosocial preferences. Additional analysis validates the positive effect of tax cuts on CSR using the 2017 federal tax reform. Overall, these findings shed light on how public policies shape companies’ incentives to be socially responsible. The second essay exploits the adoption of U.S. state-level Paid Family Leave laws to test whether family-friendly policies affect firm innovation. We find that PFL policies increase the innovation outputs of firms whose employees are more exposed to these laws. The stronger attraction of female inventors and the higher retention of female inventors contribute to the output gains. Tests at the state level suggest that younger inventors move into states after PFL adoption, and the move-in inventors are generally more productive than the move-out inventors at the personal level. Further tests at the inventor level show that females are less likely to drop out from the inventor career after PFL adoption. Overall, the behavior change in inventor career choices is the main channel through which PFLs affect firm innovation. In the third essay, we study the effects of U.S. state-level employment nondiscrimination acts (ENDAs) that prohibit discrimination of LGBT people in employment on non-diversity on corporate social responsibility. This positive effect is also more pronounced for firms with greater financial strengths and greater visibility, suggesting that firms proactively use CSR to react to public social attention following ENDA enactments. In addition, the result is stronger for firms with more socially responsible institutional investor ownership, pension fund ownership and long-horizon institutional investor ownership. Overall, our findings shed light on how public policies aimed at equal treatment of a particular group of employees can affect CSR policies related to other stakeholders.
DOI: 10.32657/10356/156831
Rights: This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0).
Fulltext Permission: open
Fulltext Availability: With Fulltext
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