The effects of peer information and debt covenants on corporate investments

The thesis examines the effects of agency conflicts and peer information disclosures on corporate investment decisions. Corporate investments involve a range of decisions including investing in capital expenditures, R&D expenditures, mergers and acquisitions, and other intangibles. These capital allocation decisions are essential because they allow firms to retain as well as develop new competitive advantages. For example, capital expenditures allow firms to invest in long-term tangible assets such as plants, property, and equipment. Moreover, M&A deals can help firms to quickly gain market share or valuable technologies from competitors. Finally, investing in R&D and other intangibles is essential for business survival in an increasingly intangible-based economy. The studies in this dissertation shed light on some factors that may affect these decisions from two angles: agency problems and spillover effects. As investment decisions are generally irreversible, managers need as much information as possible to make effective decisions. Delaying these decisions would put firms in a disadvantageous position because competitors can capture market share faster. Therefore, mitigating agency conflicts is one way to improve investment decisions. Moreover, additional financial disclosures can help to resolve the uncertainty regarding future outcomes.