Abstract

This dissertation consists of three chapters that tackle topics in Microeconomics. The three essays are as follows.
Chapter 1 examines the effects of liquidity requirements on the stability of different interbank network structures. While liquidity requirements strengthen the stability of the financial system, reduce the extent of financial contagion, and prevent the failure of interbank networks, banks
with different functions within the interbank network should be bound by varied liquidity requirements. Furthermore, the study demonstrates that excessively strict liquidity requirements can impair the normal operations of financial institutions, potentially impeding economic growth.
Chapter 2 empirically analyzes the effect of the general managerial ability of CEOs on firms’ choice of successors. Using recent data collection from EXECUCOMP and Boardex, I examine the external and internal recruiting decisions of publicly traded firms in North America during the past two decades. Using an instrumental variable approach, I find that a simple probit method is likely to underestimate the effect of successors’ general abilities, while the relative importance of general
ability is lower for large firms due to asymmetric learning about internal and external candidates, as well as a trade-off between CEO ability and a significant premium to external successors or generalists.
Chapter 3, co-authored with Dr. Ming Li, theoretically studies the quality disclosure strategies of an industry in the absence of regulation and proposes the optimal disclosure strategy for an industry in a vertical differentiation duopoly model. In a price-competitive environment, we demonstrate that industries can collude on how to disclose private information about product qualities, and it is optimal for the industry to reveal only the order of the product qualities in order to maximize joint
profits. It also suggests that disclosing any quality cutoffs will not enhance the joint profit of the industry.