Topics in Empirical Corporate Finance

In the first chapter of my dissertation, I study firm innovation as a transmission channel for monetary policy. Analyzing the impact of unanticipated changes to monetary policy on the cross-section of U.S. equity returns, I show that the sensitivity of firms’ equity prices to changes in monetary policy may depend on firms’ innovation characteristics. I find that the more the firm employs an exploratory search in its innovation strategy, the higher the sensitivity of its stock price to monetary policy. Further, I present evidence suggesting that variables capturing exploratory and exploitative innovation characteristics of firms may explain the relative sensitivity of firms’ future earnings, capital expenditures, and R&D spending to monetary shocks.

In the second chapter of my dissertation, I define a novel measure to capture the timing of the future cash flow generated by the firm’s investment in innovation. I call this measure “the duration of firm innovation”. I show evidence suggesting that my measure of the duration of firm innovation is a significant channel for the transmission of monetary policy to equity prices.

In the third chapter, I study the effect of work-from-home on employee performance and teamwork in the context of the sell-side analyst industry. Using a difference-in-difference setting utilizing the exogenous adoption of work-from-home following the start of the Coronavirus pandemic, I find that the performances of analysts working both individually and in teams are negatively affected following the adoption of work-from-home. Moreover, I find that following the adoption of pandemic-induced work-from-home, team size becomes negatively related to team performance, supporting the higher coordination costs hypothesis in work-from-home settings. I also find a negative impact of working from home on teams led by female analysts. These findings are in line with the findings of the prior literature which document an unequal impact of work-from-home on female employees due to the unequal burden of household responsibilities.