UCLA

In the first chapter, I show that mature patent-practicing firms respond to windfall profits derived from exogenously extended patent protection time by engaging in external patent acquisitions that diversify their patent portfolios into new technologies. By exploiting the random timing of patent term expiry dates and their unexpected extensions due to the Uruguay Round Agreements Act, I find that a one standard deviation increase in the citation-weighted patent portfolio share of term-extended patents leads to an increase in cash flow by 1.5 percent of book assets. Given these windfall profits, I find evidence of physical capital investment, debt issuance reduction, and acquisitions of new external technologies. Internal investments in R&D, on the other hand, show no response, suggesting high R&D adjustment costs for large, mature firms. In the second chapter, I find that being connected to directors who are or had been board members at bankrupt firms at the time of bankruptcy filing limits the efficacy of business networks in searching for directorships. Assuming that corporate bankruptcies can weaken interpersonal ties among directors, I exploit a quasi-natural experiment to investigate the degree to which director turnover is dependent on professional connections forged from current and past board memberships. By comparing directors who are indirectly linked to bankruptcy-filing firms through their professional networks to those without this indirect link, I find that a director's chances of finding additional directorships within a 1-year period are lowered by over 10 percent on average after losing a set of connections due to corporate bankruptcies. This decline in director mobility is concentrated mostly among highly central directors and directors with board positions at firms with high G-Index measures, suggesting that the dependency on personal ties is stronger among firms with weak shareholder rights. In the third chapter, we explore the proxy voting patterns of passive mutual funds. We find that passive funds disagree with management more frequently than active funds within fund family. Additionally, voter efficacy between passive and active funds are not equal across agenda item categories.