Essays on Investor Protection and the Impact of Globalization of Capital Markets

In the first essay, we examine the effectiveness of U.S. investor protection laws in improving the corporate governance and investment decisions of cross-listed firms. We find that firms with higher excess cash reserves make more acquisitions and experience lower announcement period abnormal returns. While acquisition likelihood is similar across cross-listed and non-cross-listed firms, cross-listed firms make better acquisition decisions with excess cash than their non-cross-listed peers. The improvement in cash utilization is more pronounced for firms cross-listed on major US exchanges, and for firms from countries with weak investor protection laws.;The second essay examines the long term impact of the first significant deregulation of U.S. disclosure requirements since 1934 on cross-listed foreign companies. We find that the deregulation, Rule 12h-6 in 2007, has significantly reduced the benefits enjoyed by exchange cross-listed firms. We document a decline both in the cross-listing premium and in the abnormal amount of capital raised for firms cross-listed on major U.S. exchanges. We find decrease of benefits to be particularly significant for firms from weak investor protection countries. These results are consistent with the argument that Rule 12h-6 has weakened the effectiveness of bonding by listing on U.S. exchanges.;The third essay examines the impact of lending relationships on loan contract terms. We find that relationship lending on average leads to higher interest rate, lower collateral requirement, and shorter loan maturity for our sample of international borrowers. However, we also show that there is significant variation across countries regarding the benefits and costs of banking relationships, which can be explained by countries' legal and regulatory environments. Stronger creditor rights and higher disclosure requirements can significantly increase the benefits of relationship lending. Borrowers in countries with well enforced creditor rights and strict disclosure regulations actually pay lower interest rate on relationship loans.