Date of Award
12-1-2025
Document Type
Dissertation
Degree Name
Ph.D. in Business Administration
First Advisor
Kathleen Fuller
Second Advisor
Robert Van Ness
Third Advisor
Lixiong Guo
School
University of Mississippi
Relational Format
dissertation/thesis
Abstract
In the first essay, we analyze how dark pool trading changes surrounding one of the largest corporate informational events, mergers and acquisitions. Alfarhoud, Bowe, and Zhang (2021) and Ye and Zhu (2020) suggest that the ability to hide trading is most valuable when the cost of information leakage is high. Since recent studies (e.g. Brolley, 2020; Ye and Zhu, 2020) find detrimental effects of dark pool trading on market quality, we expect that trading surrounding mergers and acquisitions will be opportunistic. We find that the share of dark pool trading rises significantly prior to an announcement compared to trading on traditional exchanges. The increase is evident for target as well as acquiring firms, but stronger for target firms. Once the merger is announced, the share of dark pool trading declines immediately.
In the second essay, we examine the relation between corporate governance and dark pool trading. Previous research has shown that effective boards can reduce information asymmetries (Kanagaretnam, Lobo, and Whalen, 2007; Goh et al., 2014) while dark pool trading increases when there are informational asymmetries (Alfarhoud, Bowe, and Zhang, 2021). We argue that there should be less dark pool trading for companies with good boards. We find that there is an inverse relation between board size and board independence on the share of dark pool trading. We also find that when there is a change in a company’s CEO or the board size, the level of dark pool trading decreases significantly.
The third essay examines the relation between corporate culture and dark pool trading. If strong corporate culture helps reduce information asymmetries, then firms with stronger corporate culture would have less asymmetric information which translates to less dark pool trading on asymmetric information. Consistent with this view, we find that firms with strong corporate culture have significantly lower dark pool trading. While the overall effect of culture weakens during the earnings announcements, integrity-focused culture remains associated with lower dark pool share. Finally, we show that impact of corporate culture is more pronounced in opaque industries than in less opaque industries.
Recommended Citation
Valsalan, Sarath, "Essays on Corporate Finance and Dark Pool Trading" (2025). Electronic Theses and Dissertations. 3531.
https://egrove.olemiss.edu/etd/3531