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Thesis: S.M. in Management Research, Massachusetts Institute of Technology, Sloan School of Management, 2016., Cataloged from PDF version of thesis., Includes bibliographical references., In the first chapter, I examine how financial constraints affect asset allocation, and consequently productivity and asset values. Using a unique dataset of agricultural outcomes, I explore how farmers respond to exogenous cash inflows that are caused by an expansion of hydraulic fracturing (fracking) leases. Farmers who receive positive cash flow shocks increase their purchases of land, which results in a reallocation effect. Examining cross-county purchases, I find that farmers in high-productivity counties who receive cash flow shocks buy farmland in low-productivity counties. In contrast, when farmers in low-productivity counties receive positive cash flow shocks, they do not engage in similar behavior. Moreover, farmers increase their purchases of vacant (undeveloped) land. Average output, productivity, and profits all increase following these positive cash flow shocks, and farmland prices rise significantly. These effects are broadly consistent with an efficient reallocation of land towards more productive users. Finally, I show that farmers borrow relatively less following the cash flow shock. In the second chapter, I develop and empirically test a dynamic sequential equilibrium model of corporate cash payout policy that endogenizes a firm's dividend initiation decision, and its extreme reluctance to subsequently cut dividends in a sequential equilibrium. After payment of dividends, all excess cash is disgorged via stock repurchases that elicit no price reactions. The theoretical model generates results consistent with many stylized facts related to dividend initiations, including: a positive dividend-initiation announcement effect; a larger (in absolute value) negative announcement effect for a dividend cut/omission than for an initiation; and a probability of dividend initiation that is increasing in the firm's profitability and assets in place, and decreasing in the personal tax rate on dividends relative to capital gains. The model also generates addition, by Richard Todd Thakor., Financial constraints and asset reallocation: evidence from farming and fracking -- The dividend initiation decision: theory and evidence -- A theory of efficient short-termism., S.M. in Management Research

Thesis: S.M. in Management Research, Massachusetts Institute of Technology, Sloan School of Management, 2015., Cataloged from PDF version of thesis., Includes bibliographical references (pages 72-76)., This paper develops and tests a dynamic, sequential equilibrium model of corporate cash payout policy that endogenizes a firm's dividend initiation decision, and its extreme reluctance to subsequently cut dividends in a sequential equilibrium. After payment of dividends, all excess cash is disgorged via stock repurchases that elicit no price reactions. The theoretical model generates results consistent with many stylized facts related to dividend initiations, including: a positive announcement effect associated with a dividend initiation; a larger (in absolute value) negative announcement effect for a dividend cut/omission than for an initiation; and a probability of dividend initiation that is increasing in the firm's profitability and assets in place, and decreasing in the personal tax rate on dividends relative to capital gains. The model also generates additional novel predictions, one of which is that the probability of dividend initiation is decreasing in managerial ownership of the firm, and this effect is stronger the weaker is (external) corporate governance. A second novel prediction is that the dividend initiation probability is decreasing in the potential loss in value from the "two-audience-signaling" information disclosure costs associated with secondary equity issues. These new predictions are tested empirically using a predictive logit model of dividend initiations. Moreover, the paper tests and finds additional empirical support for the information-disclosure result using a regression discontinuity design., by Richard Todd Thakor., S.M. in Management Research