Raising Capital to Fund Corporate Investments

On Friday 6 June 2025 Trang Quynh Vu will hold a trial lecture on a prescribed topic and defend her thesis for the PhD degree at NHH.

Trang Vu’s dissertation investigates how firms raise capital to finance investment.

The first essay examines how U.S. public acquirers finance the cash portion of takeovers, with a novel focus on the role of credit lines. Using hand-collected data on funding sources for 1,400 bids, the study finds that credit lines are the most frequently used source of cash.

The findings highlight a dual role for credit lines: financial flexibility and creditor screening. First, credit lines are often used by financially constrained acquirers and in time-sensitive transactions, where quick access to funds is critical. Second, deals financed with newly arranged or renegotiated credit lines—which require lender approval—are associated with higher announcement returns, greater synergies, and lower takeover premiums, suggesting that lenders provide valuable external scrutiny during the deal process.

When Norway’s Sovereign Wealth Fund Speaks Up, the Market Listens

A new study shows that share prices rise when NBIM announces its intention to vote against corporate management. `The market sees it as a sign that someone is watching, ´ says NHH researcher Tzu-Ting Chiu.

The second essay, co-authored with Tore Leite and Karin Thorburn, revisits the pecking order theory by modeling a firm’s choice between debt and equity under asymmetric information. Unlike traditional models that assume debt is always preferred, the framework demonstrates that firms self-select the security—debt or equity—with the lowest expected adverse selection cost and the least negative market reaction.

Empirical analysis supports the model’s predictions, highlighting a conditional pecking order in which firms choose the "least-bad" financing option based on how the market interprets their private information.

The third essay, co-authored with Markus Lithell, Matteo Pirovano, and Davide Sinno, explores how private firms raise capital through securities crowdfunding at various growth stages. The study finds that early-stage firms primarily use equity instruments while more mature firms shift toward debt.

Additionally, access to bank financing influences crowdfunding choices: firms in areas with fewer bank branches or limited collateral availability are more inclined to use debt crowdfunding. Equity crowdfunding remains vital for pre-revenue firms, which face higher information asymmetry.