Essays on the Impact of New Technologies in Finance



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This dissertation composes of three essays in Fintech and Innovation Finance. The first essay, Private Equity Acquisitions and Product Market Decisions: Evidence From Trademarks," addresses the question of whether PE firms reduce the introduction of new products and services (Product Innovation) after taking a company private through a leveraged buyout (LBO). To address endogeneity issues, I use two approaches: First, match LBO firms to non-LBO firms within the same four-digit SIC code and based on Tobin's Q and Capex-to-sales ratio in the LBO year. Second, use a control sample of failed to close non- LBOs. I measure product innovation by using filings of trademarks in new and existing products in the treated and controlled firms. I find that PE firms do not reduce trademark filings for new products, but they reduce trademarks filed for existing products, which indicates that they reduce new messaging of existing products. I also do a cross-sectional analysis and show that the level of leverage neither affects LBO firms' trademark filings nor their number of product classes. But, I find evidence that management incentives affect the LBO firms' trademark filings and product concentration. The second essay, A Commodity-Model Analysis of the Dynamics of Bitcoin Prices" In this essay, I analyze whether bitcoin, a transactional token of new technology (Blockchain), exhibits an asset-pricing behavior of a commodity. Blockchain technology improves transactional efficiency. The most pervasive blockchain uses bitcoin as its transactional currency. Bitcoins have dual-use: their use for transactions and their store of wealth value as an asset. Similar dual-use exists in commodities. I use the theoretical model of Rutledge et al. (2000) as a basis to empirically test bitcoin returns to the level of inventories. I also test the futures implied convenience yield and bitcoin options implied volatility slope on inventory. I find that although bitcoin futures and options behave like a commodity, bitcoin spot prices do not behave like a commodity. I find evidence that the number of new participants drives bitcoin returns, showing elements of a network effect in bitcoin returns. The third essay, ``Price Impact and HFT Counterparty Pairings: A Simple Approach to Estimation and Testing," co-authored with Thomas George, analyses the role High-Frequency Traders play in times of information uncertainty during quarterly earnings announcements. High-Frequency Traders are a class of traders that use information technology to make trading decisions based on an algorithm and have speed technology to carry orders to trading venues at a higher speed than other informed traders. This paper analyses HFTs' trading behavior before the earnings announcements and compares it to a 'typical' trading day, which is the week after the announcement day, and discovers that HFTs provide liquidity with low transitory price impact when they trade with each other compared to when non-HFT trade with each other. Similarly, the adverse selection component of price impact is lower for trades that have HFTs as counterparties.



Fintech, Private Equity, Blockchain, Bitcoins, Trademarks, LBO, HFT, Price Impact, Adverse Selection, Product Innovation, Convenience Yield