Doctoral theses

Permanent URI for this collection

https://hdl.handle.net/20.500.14417/3226

Browse

Browsing Doctoral theses by Author "Chakraborti, Rajdeep"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Publication
    The Effects of Stimuli and News Shocks on Firms and Real Estate
    (IE University, 2023-02-24) Chakraborti, Rajdeep; Gete, Pedro; https://ror.org/02jjdwm102
    This dissertation consists of three chapters. In Chapter 1 we show that executive ownership is a significant driver of the demand for credit following credit expansion policies. Our focus on credit demand is in contrast to most studies that have focused on credit supply factors such as bank-capital. Our identification exploits the large and unexpected Chinese credit expansion in 2008. This setting offers a unique advantage as in 2008 the Chinese government had almost complete control over the banking sector, and it directed the banks to increase credit supply. Thus, in this setting, demand, rather than supply, largely drives the observed changes in Firms’ borrowing. In Chapter 2 we study a model in which leverage, and compensation are both choice variables for the firm and borrowing spreads are endogenous. We show that allowing for endogenous compensation and leverage can explain the conflicting findings of the empirical literature. We uncover a new channel of complementarity between effort and leverage that induces a correlation sign opposite to what current theoretical models predict. We also study the dynamics of leverage and compensation design after a credit stimulus. We derive a set of new empirical predictions. For outward-shifts in credit supply, greater CEO pay-performance sensitivity implies higher leverage growth. Moreover, variable compensation increases after the credit stimulus, especially for firms with low idiosyncratic risk. In Chapter 3 we study the effects of news about sea level rise on housing markets. We exploit two natural experiments in Spain. In 2007 and 2014, Greenpeace published two alarming reports predicting catastrophic consequences for La Manga, a tourist peninsula. These reports were widely cited in the local news. We find that both reports caused immediate and persistent drops in housing prices in La Manga but had no effect on housing rents. The transaction numbers in La Manga remained unchanged post 2007 report but dropped after the 2014 report. Difference-indifferences regressions with different control groups confirm the results. We find persistent drops in average transaction price in La Manga around 4% to 24% and in listing price of around 5% to 10% post publication of the reports. We also find an additional 2% to 4% drop in average transaction price in La Manga by the Spanish buyers relative to the foreign buyers. Transaction number also drops by 9% post 2014 report.