Three Essays in Corporate Finance

Abstract

The first study shows that firms located closer to competitors experience improved operational performance, driven by knowledge spillovers and talent pooling, but without corresponding gains in stock returns. Using a combined Propensity Score Matching and Difference-in-Differences design, the study provides robust causal evidence of proximity’s effect on firm outcomes, particularly under exogenous shocks such as M&A events. The second study explores how geographic proximity affects innovation. Findings reveal that while firms in dense clusters spend less on R&D, they achieve higher innovation output and greater strategic alignment, with competition moderating the proximity-innovation link. Proximity fosters business and technological similarity, enabling cost efficiencies and differentiated innovation strategies. The third study examines the effect of geographic density on corporate governance and CEO compensation. Firms in dense networks have smaller, more independent boards and offer higher, performance-based CEO pay. These outcomes reflect improved access to industrial knowledge, professional networks, and competitive benchmarks, especially in high-tech hubs like California, New York, and Texas.