Three essays in corporate finance

The first essay examines how corporate transparency contributes to firm growth, using a panel dataset of Real Estate Investment Trusts (REITs). REIT data provide a unique laboratory to study this issue because REIT investment depends heavily on external funds due to the mandatory pay-out requirement. I find that corporate transparency, measured by stock price non-synchronicity, has a strong positive effect on REIT growth. The results suggest that greater transparency facilitates firm growth by reducing external financing costs. The magnitude of this effect is larger in the equity market, where the adverse selection problem is more severe, than in the debt market. Moreover, the sensitivity of investment to cash flows is decreasing in transparency, which provides evidence that transparency.;The second essay examines the effect of corporate transparency on firm growth in a broad corporate setting. To control for heterogeneous financing needs across firms, I directly measure the externally financed growth of 9280 Compustat firms between 1990 and 2005. I find that transparency is positively associated with externally financed growth rates after controlling for other determinants. The results suggest that greater transparency facilitates firm growth by relaxing the information-based constraints on external financing.;The third essay investigates the effects of firm credit ratings on IPO pricing. Evidence from 5141 U.S. common share IPOs during 1986--2004 shows that firms with credit ratings when they go public are underpriced 23% less than firms without credit ratings. The existence of credit rating also reduces price revision during the bookbuilding process. These results, robust to corrections for endogenous selection, suggest that credit ratings convey important information which reduces value uncertainty of the issuing firm as well as information asymmetry among participants in the IPO market.