Qing Xia ESSAYS IN FINANCIAL ECONOMICS

Transcription

1 Qing Xia ESSAYS IN FINANCIAL ECONOMICS

2 ISBN DOCTORAL DISSERTATION IN FINANCE STOCKHOLM SCHOOL OF ECONOMICS, SWEDEN 2018

3 Essays in Financial Economics Qing Xia Akademisk avhandling som för avläggande av ekonomie doktorsexamen vid Handelshögskolan i Stockholm framläggs för offentlig granskning fredagen den 9 november 2018, kl 15.15, Swedish House of Finance, Drottninggatan 98, Stockholm

4 Essays in Financial Economics

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6 Essays in Financial Economics Qing Xia

7 Dissertation for the Degree of Doctor of Philosophy, Ph.D. in Finance Stockholm School of Economics, 2018 Essays in Financial Economics c SSE and Qing Xia, 2018 ISBN (printed) ISBN (pdf) This book was typeset by the author using L A TEX. Front cover illustration: c ilolab/shutterstock.com, 2018 Printed by: BrandFactory, Göteborg, 2018 Keywords: Creditor Rights, Innovation, Collateral, China, Trust, Bond Covenants, Venture Capital, Entrepreneurship, College Attendance

8 To Mengyi and Bo iii

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10 Foreword This volume is the result of a research project carried out at the Department of Finance at the Stockholm School of Economics (SSE). This volume is submitted as a doctor s thesis at SSE. In keeping with the policies of SSE, the author has been entirely free to conduct and present his research in the manner of his choosing as an expression of his own ideas. SSE is grateful for the financial support provided by the Bankforskningsinstitutet which has made it possible to fulfill the project. Göran Lindqvist Director of Research Stockholm School of Economics Magnus Dahlquist Professor and Head of the Department of Finance Stockholm School of Economics

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12 Acknowledgements I would like to express my sincere gratitude to my supervisors Per Strömberg and Laurent Bach for the continuous support during my Ph.D studies, for their patience, motivation and encouragement. I am particularly grateful for the full understanding and support of Laurent Bach when I have to make hard choices because of all kinds of constrains that I came across. I have greatly benefited from the advice of Professor Per Strömberg for his continuous encouragement, positive attitude and inspiring economic intuition during each and every discussion. I also wish to thank the faculty members of the Swedish House of Finance who helped me in various ways in my research and life. In particular, I have received insightful advice and help from Bo Becker and during my job market. My sincere thanks also go to Ramin Baghai, Bo Becker, Daniel Metzger and Paolo Sodini who gave me the opportunity as the teaching assistant of their courses. In addition, I would like to thank the administrative team of the department who made my life and work in Sweden much easier and smooth. I would also like to thank all my friends and fellow Ph.D. students at SSE and Stockholm University. Special thanks go to Jieying Li who is a wonderful coauthor and a friend always has time to talk; my cohort in the PhD program: Rafael B. De Rezende, Adam Farago, Nikita Koptyug, Mariana Khapko and Tomas Thörnqvist for their mutual support during these years we spent together. I am also grateful for the financial support provided by the Bankforskningsinstitutet (BFI) during my studies. Last but not least, I will always be grateful to my friends and family for their unconditional love and encouragement during this process. I am deeply thankful to my beloved wife Mengyi, and our lovely son, Bo. Both of you make my life complete. I dedicate this thesis to you.

13 viii Stockholm, October, 2018 Qing Xia

14 Contents 1 Creditor Rights and Innovation: Evidence from China Introduction Institutional Context Pre-Property Law Creditor Rights How does the New Law Change Creditor Rights? Is the New Law Anticipated? Hypothesis Development Impact of the Reform on Financing Impact of the Reform on Investment Impact of the Reform on Innovation Empirical Strategy Data and Sample Chinese Patent Data Unavailable Land Data Firm Level Data Univariate Analysis Geographic Motivation Empirical Results Capital Structure and Cash Holdings Investments Innovation Exploring Cross-Sectional Heterogeneity Conclusion References Tables Figures ix

15 x 2 Trust and Use of Covenants Introduction Theoretical Motivation What is Trust? How does Trust Affect Contracts? Empirical Strategy Methodology Data and Variables Bond Covenants Empirical Measures of Trust Other Control Variables Descriptive Statistics Empirical Results Multivariate Analysis Trust and the Use of Specific Types of Covenants Other Contracting Terms The Quality of Legal Enforcement Repeated Interaction proof reading stops here Heckman Selection Further Robustness Checks Conclusion References Tables Attract the talents back: the impact of returnee entrepreneurs on Venture Capital investments Introduction Data and sample Stylized facts of Chinese VC investments Exit performance Investment behavior and entrepreneur-vc matches Policy to attract highly-talented emigrants Empirical analysis and results of the policy Overall effect of the policy on VC investments in China Investment preference of VC investors: returnee VS local

16 3.5.3 The heterogeneous impacts of the policy on entrepreneurial financing for local startups Discussion and Conclusion References Tables Figures Credit Constraint and College Attendance Introduction Background Empirical Strategy Data and Sample Empirical Results The Association between Housing Wealth and College Attendance Instrumental Variables Results Conclusion and Policy Implication References Tables Figures xi