Essays in corporate finance: Organizational form, financing and innovation.

A firm's value consists of the value of its assets in place and the value of its growth options. In my dissertation I focus on understanding how a firm's internal organization and its capital structure interact with its growth options - and hence its value. I hypothesize that firms that want to generate value through innovation would prefer an organizational design and a capital structure that allow for more discretion to managers on long term projects. In accordance with this I show that the conglomerate organizational form has a negative impact on the novelty of corporate R&D activity. The drop in R&D productivity is costly for the firm since it results in a lower market value. Moreover, I present evidence that lack of commitment, weak incentives and asymmetric information are responsible for the impact diversified organizational form has on R&D productivity. I also show that arms length financing (such as public debt and equity) is preferred by more innovative firms, whereas less innovative firms tend to use relationship-based borrowing (such as bank borrowing).Ph.D.FinanceManagementSocial SciencesUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/126818/2/3276291.pd