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New SSE dissertation by Oliver Engist

Oliver Engist - Microeconometric Applications in Corporate Finance and Sports

This thesis presents five applications of microeconometric techniques in the fields of corporate finance and sports. Each chapter is self-contained. 

In chapter 1, we analyze how firms recover from an unexpected loss of critical capital, such as machinery or buildings. Using data from property and liability insurance, we find that firms grow slower and hire fewer employees after a loss. This analysis shows that firms are confronted with significant adjustment frictions when dealing with unexpected destructive events. 

In chapter 2, we investigate the relationship between financing constraints and the demand for insurance. We find that firms’ demand for insurance is negatively related to their credit worthiness. This suggests that financially constrained firms have more to gain from risk management, which is in line with the theoretical prediction. 

In chapter 3, I extend the analysis from chapter 2 to the context of cash holdings. Since we find that financially constrained firms demand more insurance, I hypothesize that these firms also benefit disproportionally from holding larger cash reserves. In contrast to the theoretical predictions, I find no evidence that financially constrained firms hold more cash. 

In chapter 4, we revisit the question whether observing salient events affects the subjective assessment of risk exposure. We exploit detailed information about the size and cause of insurance claims to estimate whether peers demand more insurance in response to a salient insured accident in their vicinity. In contrast to similar analyses in the literature, we find little evidence to support this hypothesis. 

In chapter 5, we exploit the seeding procedure of the UEFA club football competitions to estimate whether facing weaker opponents in the group stage has a positive effect on a team’s tournament performance. We find no evidence that the pot allocation itself significantly contributes to the probability of advancing. 

Oliver Engist holds a BA from the University of Basel and a MSc in Behavioral Economics from Chapman University. His research interests lie primarily in the fields of applied microeconomics and finance. 

Oliver Engist - Microeconometric Applications in Corporate Finance and Sports