Ownership Structure and Firm Value: Evidence from Mergers of Institutional Investors and Genetics, Homeownership and Home Location Choice

Thesis (Ph.D.)--University of Washington, 2014In the first chapter I investigate the effect of the dispersion of institutional shareholders on firm value. By using mergers of institutional investors as exogenous changes to the ownership structure of firms in their portfolios I find that institutional investor monitoring is a complement to monitoring by other institutional investors. Concentration of institutional ownership is negatively related to firm value. The average cumulative abnormal return over an 11-day window around the merger announcement is 69 basis points lower for firms that experience an increase in institutional ownership concentration than for firms whose ownership structure is unaffected. My findings are consistent with Edmans and Manso (2011) which shows that multiple small shareholders can be more effective monitors than few large shareholders. Besides shedding light on the relation between institutional ownership and firm value my results have implications on the use of institutional ownership variables in corporate governance research, in general. The second chapter is joint work with my co-authors Henrik Cronqvist and Stephan Siegel. We investigate the question of what explains variation across individuals in homeownership and home location choices. We address this question by decomposing the variation in individuals' choices into (i) a genetic factor, (ii) parental influence, and (iii) individual-specific environmental factors. We find that variation across individuals in their decisions to own or rent has a strong genetic component, while parental influence seems to not affect that choice once we control for socioeconomic characteristics. Furthermore, conditional on homeownership, the amount of housing individuals consume is also attributable to important genetic factors. Our findings contribute to a deeper understanding of the factors that explain individual behavior with respect to the housing market, and add to an expanding literature on the biological and genetic factors that influence individuals' economic and financial decisions