Three essays in corporate finance

This dissertation examines the role of corporate governance in corporate financing decisions. The first essay explore the effect of misalignment of managerial interests with those of shareholders, which is measured by divergence between managerial voting and cash flow rights on the seasoned equity offerings (SEOs) by dual-class firms. We show that SEO announcement returns and long-run stock performance following SEOs are negatively related to measures of the divergence between managerial control and cash flow rights. Our results support the view of agency problems that the misalignment of interests between managers and shareholders can create managerial incentives to undertake value-destroying investments to extract private benefits, ultimately leading to a reduction in firm value.;The second essay investigates the effect of classified boards on the market reaction to seasoned equity offering (SEO) announcements and the operating performance following SEOs. We find that firms with classified boards on average earn lower SEO announcement returns relative to firms with unitary boards. Result from the change in matched-firm-adjusted operating performance analysis shows that firms having a classified board structure earn worse abnormal operating performance following SEOs relative to firms having a unitary board structure. Our results support the view that classified boards entrench managers and are ineffective in preventing them from misuse of funds raised in SEOs.;The third essay examines the effect of product market competition on firms' credit ratings. We find that market competition is positively related to shareholder value and negatively related to firm's credit rating. We also find that firms are more likely to receive investment-grade credit ratings in less competitive markets. Finally, we find that firms in more competitive markets tend to make more R&D and advertising expenditures. Overall, our results indicate that product market competition align more closely the interests of managers and shareholders and thus create managerial incentives to undertake riskier investments to maximize shareholder value, which lowers firms' credit ratings.