| Résumé: | <p>This dissertation consists of three essays in law and finance, with applications in private markets and real estate. In the first chapter, I examine the direct impacts of concentrated ownership by private market funds. Using the hotel industry as a laboratory, I show that private funds and REITs use the opacity of their ownership structures to purchase seemingly competing hotels within the same market. I show that increased concentration of ownership by private markets funds following acquisitions that cause exogenous shocks to ownership concentration results in decreased customer satisfaction (especially perceptions of value and service) according to reviews from TripAdvisor.com.</p>
<p>In the second chapter, I explore the spillover impacts of concentrated ownership by private equity funds on other owners and the communities in which they operate. Using mergers of private-equity backed firms to isolate quasi-exogenous variation in concentration of ownership at the neighborhood level, I find that shocks to institutional ownership indeed cause higher prices and rents — but, contrary to public concerns — increase rather than decrease neighborhood diversity. Institutional investors extract value from neighborhoods by challenging tax assessors’ valuations and thus reduce their tax bill by an estimated $4.1b nationwide. In the final chapter, I examine the circumstances in which covenant-lite lending may be advantageous to members of a syndicated facility.</p>
<p>Covenant-lite loans limit the circumstances in which lenders can withdraw or renegotiate credit agreements, and thus insulate lenders from inefficient liquidation arising from shocks to other syndicate members. I find covenant-lite lending is preferred where monitoring is imperfect and the probability that the other lender will suffer a repayment preference shock is higher. Collectively, these papers critically examine how the rise of institutional investors, especially through private funds, has impacted competition and contracting within markets.</p>
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