Three essays in corporate finance

My Ph.D. dissertation consists of three essays in corporate finance. The first essay, co-authored with Thomas Chemmanur, develops a theoretical analysis of a private firm's choice of exit mechanism between IPOs and acquisitions. We derive a number of testable predictions regarding a firm's equilibrium choice between IPOs and acquisitions. We also provide a resolution to the empirical finding that many firms which are able to obtain higher valuations in the IPO market never the less choose to be acquired (the "IPO valuation premium puzzle").;The second essay presents an empirical analysis of a private firm's choice between IPOs and acquisitions, and develops the first empirical analysis in the literature of the "IPO valuation premium puzzle". In the first part of the paper, I test several new hypotheses regarding a firm's choice between IPOs and acquisitions and develop several new empirical findings consistent with the theoretical predictions of the first essay. My analysis of private firm valuations in IPOs and acquisitions in the second part of the paper indicates that IPO valuation premia disappear for larger firms after controlling for various factors affecting a firm's choice between IPOs and acquisitions. Further, after controlling for the long run component of the expected payoff to firm insiders from an IPO exit (as suggested by the first essay), I find that the IPO valuation premium vanishes even for smaller venture backed firms and shrinks substantially for non-venture backed firms as well.;The third essay, co-authored with Thomas Chemmanur and Mark H. Liu, develops a theory of the management of innovation as well as equity carve-outs under heterogeneous beliefs among investors in the equity market. We derive a number of testable predictions regarding a firm's equilibrium choice between integration and non-integration. We also provide a rationale for the presence of "negative stub values" in the equity carve-outs of certain firms (e.g., the carve-out of Palm from 3Com) and develop predictions for the magnitude of these stub values.