Open Access Te Herenga Waka-Victoria University of Wellington
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Empirical Essays on Corporate Venture Capital, Financial policies, and Liquidity Management

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posted on 2023-05-15, 20:23 authored by Bernard Tawiah

This thesis is composed of three self-contained empirical essays in entrepreneurial financeand corporate finance, with the first two exploring the effect of corporate venture capitalinvestments on financial policy and dividend payout. The third examines the impact ofCOVID-19 on corporate investment and how cash holdings reduce the impact. Firms invest in corporate venture capital (CVC) for strategic reasons. Consistent with maintaining financial flexibility to fund CVC driven innovation and acquisitions, in Essay one, we find that CVC investing firms hold less debt and more cash. Our results are morepronounced among the highest CVC investors and strategically driven CVC investors assuch firms maintain the most conservative financial policies. CVC firms are more likely toacquire using cash and this relationship is more pronounced among strategic CVC firms.

Overall, our results are consistent with studies that advance that firms with growth orinvestment opportunities maintain financial flexibility.

Consistent with the signaling theory that firms usually pay cash dividend to signalpositive prospects, Essay two finds that CVC investors pay higher dividends compared tonon–CVC firms. Specifically, CVC investment leads to a 9% increase in dividend payout.

The results show that the relationship between CVC investment and dividend is driven bystrategic CVC investors. There is no statistically significant relationship between CVCand dividend for financially oriented CVC firms. Possible channels that influence therelationship between CVC investment and dividend payout are future profitability andearnings. In the third essay, using the COVID-19 pandemic as an exogenous shock, we examinethe impact of cash holdings on corporate investment during the COVID-19 pandemic.

We find that Capital Expenditure and M&A levels decrease by 37% and 71% respectivelyduring the COVID-19 pandemic. However, the impact of COVID-19 on investment is lessfor firms with accumulated cash. Firms at the 81st percentile of cash holdings maintaincapital expenditure and acquisition at pre-COVID-19 levels. Overall, our evidence showsthat the COVID-19 pandemic has had an adverse effect on corporate investment activities,but accumulated cash holdings reduce the impact.


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Date of Award



Te Herenga Waka—Victoria University of Wellington

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Author Retains Copyright

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Degree Grantor

Te Herenga Waka—Victoria University of Wellington

Degree Level


Degree Name

Doctor of Philosophy

ANZSRC Type Of Activity code

1 Pure basic research

Victoria University of Wellington Item Type

Awarded Doctoral Thesis



Alternative Language


Victoria University of Wellington School

School of Economics and Finance


Keefe, Michael; Chu, Luke