Essays on Corporate Governance and Asset Pricing

Abstract

The first chapter of my thesis examines the effect of corporate governance on performance using nonprofit hospitals as an economic environment with muted external governance mechanisms and patient survival of a heart attack as an unambiguous measure of performance. I find that a one standard deviation increase in strength of governance reduces the probability of death by 0.86 percentage points after controlling for patient characteristics. The second chapter of my thesis examines why a stock's market exposure, beta, varies across return frequencies. We provide a risk-based explanation for this frequency dependence of beta by introducing uncertainty about the effect of systematic news on firm value (opacity) into a frictionless model. We document a robust relationship between the frequency dependence of betas and proxies for opacity.