Three Essays on Agency Costs in Corporate Finance

This dissertation attempts to explain several firm corporate choices under the classical framework of contractual agency problems in corporate finance. Essay 1 examine firms’ debt maturity structure following exogenous changes in growth opportunities due to the COVID-19 shock. I Find companies experiencing an increase in growth options choose longer-term debt, a result that supports the arguments presented by Diamond and He, 2014 and Childs et al., 2005. Essay 2 examine the effect of firm’s risk exposure concentration on debt maturity choices. We find shortterm debt is preferred over covenants in mitigating debt-related agency problems of risk-shifting. These results indicate that maintaining future investment flexibility is important for firms with high risk exposure concentration, despite the higher liquidity risk associated with the use of short-term debt. Essay 3 examine corporate payouts following changes in the level of US economic policy uncertainty. I show firm choices of payout following increases in the level of economic policy uncertainty go against the theoretical predictions of the Free Cash Flow Hypothesis. The title for the three essays are as follows: 1. The Asymmetry Between Growth Opportunities and Debt Maturity Structure 2. Firm Risk Exposure Concentration and Debt Structure Choice 3. Corporate Payout and Economic Policy Uncertainty in the U.