Aspects of Globalization: Financial Markets Liberalization, Technological Innovation, Accounting Harmonization and Corporate Finance

This thesis investigates several aspects of globalization which are relevant to international finance. We first examine the impacts of financial market liberalization on technological innovation. We find that financial market liberalization motivates innovation, and such motivation is stronger among industries which are more dependent on external finance, have higher growth opportunities, are younger, and are high-tech intensive. High country-level institutional quality is found to strengthen this positive impact of financial liberalization on innovation. We then study how adoption of International Financial Reporting Standards (IFRS) influences technological innovation. Empirical evidence shows that mandatory IFRS adopters outperformed firms that follow local Generally Accepted Accounting Principles (GAAP), in terms of technological innovation. Likewise, high country-level institutional quality facilitates such positive influences. We also find evidence that reduced cost of capital and increased institutional investors’ holdings are two possible underlying channels through which mandatory IFRS adoption motivates innovation. Finally, we examine the negative correlation between dividend payout policy and future cash-flow uncertainty in an international context. Employing country-level and firm-level analysis frameworks, the results suggest country-level institutional quality reinforces this negative relationship. Firms with higher future cash-flow uncertainty appear to be more conservative in paying dividends in countries with a more transparent information environment, better protection for investors, more efficient legal and political institutions, and stronger control of corruption. Our finding continues to hold during the recent Global Financial Crisis (GFC) of 2008