A compilation of essays in corporate finance: Studies of the choice of equity markets, strategic innovation, and research and development investment

This dissertation contains three chapters that address separate issues in the area of corporate finance. The first chapter is an empirical analysis of firms' strategic choice of equity markets. That is, prior studies document a negative stock price reaction to public equity offering announcements, but a positive stock price reaction to private equity offering announcements. These opposing reactions suggest that capital markets believe that the form of equity matters. This issue is explored by comparing the stock price reactions for firms that issue the predicted forms of equity to those who do not and results show that issuing the unanticipated form of equity has adverse implications for firm value. The evidence also indicates that firms deviate to private markets to concentrate ownership and they deviate to public markets to capitalize on investor optimism.; The second chapter presents a theoretical model of an innovator's choice of product quality when imitation is anticipated. Specifically, the innovator's optimal quality choice is compared to that of a pure monopolist to see if and how the threat of imitation alters the innovator's decision. As a result, the model identifies a median range of relative imitation costs over which the innovator chooses a preemptive quality level. Observations from the semiconductor industry are offered as anecdotal support.; Finally, the third chapter contains an empirical investigation of the differences in investment in research and development both across firms within the same industry and across different industries. Within the existing literature, it is generally agreed that research and development activity varies both within an industry and across different industries. Empirical studies that investigate how firms make their research and development investment decision, however, are limited in number and generally lack consensus in the results.; The purpose of this chapter is to investigate what firm- and industry-specific characteristics influence investment in research and development, and how those influences vary both within and across industries. I find that firm profitability and leverage have significant and varying effects on the research and development investment decision. Statistically significant results are also obtained for the effect of firm size and industry concentration.