2018 Theses Doctoral

Three Essays on Financial Economics

Sachdeva, Kunal

This dissertation presents three essays in financial economics. The essays discuss how market frictions can affect outcomes in the real economy, the returns earned by investors, and the investment decisions made by asset managers. The first essay studies how the liquidity of assets can affect outcomes in the real economy. In particular, it focuses on the life settlement market to show how increased liquidity of life insurance contracts are causally linked to greater life longevity. The second essay studies how inside investments relate to managerial compensation and fund performance. The essay focuses on the decreasing returns to scale to arbitrage strategies and the profit maximizing motive of asset managers as the central friction affecting return. The final essay analyzes the role that information acquisition and communication have on the choice to be a principal, agent, or both. The results emphasize how the choice to be either a principal or an agent strictly dominate the mixed strategy of being both, in a highly generalized model.