Three essays regarding choice in finance
Finance is a social science with quantitative cornerstones. Therefore, the study of behavior and choice is particularly important in finance. This dissertation examines behavioral choices' impact on quantitative outcomes of firms and funds. The first essay investigates the career choices of fund managers and their impact on future fund performance. Using a unique sample of fund managers who began their career in the hedge fund industry and subsequently switched to manage mutual funds exclusively or entered into a side by side arrangement to simultaneously manage mutual funds along with their hedge fund, I examine factors that impact their career moves. The second essay focuses on a firm's choice regarding its public and private debt mix. Using a new comprehensive database that contains U.S. firm-level debt information, I examine models which address how the costs of monitoring and collecting information for the borrowers, the value of being able to renegotiate, project quality, firm ownership, and market externalities affect firms' public versus private debt mix. The final essay examines firms' choices regarding credit line usage. Bank lines of credit, or revolving credit facilities, are a crucial financing option available to corporations. This essay addresses why firms use credit lines, how much they draw on them, and what causes changes to the drawn amount.