Essays about Credit, Executive Compensation and Real Estate Markets
Başlık:
Essays about Credit, Executive Compensation and Real Estate Markets
Yazar:
Ge, Lei, author.
ISBN:
9780438115453
Yazar Ek Girişi:
Fiziksel Tanımlama:
1 electronic resource (137 pages)
Genel Not:
Source: Dissertation Abstracts International, Volume: 79-11(E), Section: A.
Advisors: Pedro Gete Committee members: Sandeep Dahiya; Behzad Diba.
Özet:
This dissertation comprises three chapters related to the risk-taking decisions of the firms and the households. The first two chapters study the risk-taking from the perspectives of the investment risk of the CEOs and its relation to their compensation structure. The third chapter looks at the housing market and we study the households' reactions to the risk of natural disasters.
Chapter 1 is an empirical work to study the link between executive ownership and firms' leverage in the presence of a government subsidized credit stimulus. We take advantage of the empirical results by using the 2008 year-end credit expansion in China and observe the reactions of all the listed firms. In the normal times, there is a negative relationship between leverage and variable compensation. This negative correlation is due to the risk-aversion of the top executives of the firms, who are in charge of the capital structure of the firm. This part has been well studied and confirmed by previous research. However, we find out that after a credit stimulus, larger variable compensation implies greater leverage change. This new finding is consistent with the facts that the executives with higher incentives are inclined to increase the debt level further than their lower incentives peers to boost the value of the firms under government stimulus. The policy implication is that the firms with more executive ownership tend to be more sensitive to the government stimulus.
Chapter 2 extends the empirical work above to the model studying the design of the CEO compensation contract into a theory of optimal leverage. In the cross-section of firms, a CEO's risk aversion causes a negative correlation between leverage and the CEO's ownership of the firm. However, the optimal compensation requires that both the fixed as well as the variable component of the compensation increase with leverage. We also show that the leverage and the ratio of variable-to-fixed compensation are positively correlated. Finally, we explain that for outward shifts in credit supply, greater CEO ownership implies higher leverage growth regardless of the CEO's risk aversion level.
Chapter 3 studies the housing market and natural disasters. This study analyzes a new database of natural disasters in the United States that we integrate with real estate and mortgage variables. This study uncovers several new facts: (1) Natural disasters permanently increase housing rents. The effects on housing prices are ambiguous. (2) Conforming mortgage applications for low-mid size homes decrease. However, jumbo applications slightly increase. Lending standards do not change; (3) Homeownership rates decline. The previous facts suggest a new tenure choice channel in which low and mid-income households hedge natural disasters by moving from the ownership to the rental market. Wealthy households expand their housing holdings. The tenure choice channel seems especially strong for flooding, which are the riskiest disasters as insurance companies do not cover them.
Notlar:
School code: 0076
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Yer Numarası | Demirbaş Numarası | Shelf Location | Lokasyon / Statüsü / İade Tarihi |
---|---|---|---|
XX(693830.1) | 693830-1001 | Proquest E-Tez Koleksiyonu | Arıyor... |
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