This paper investigates three areas of corporate finance, and the role of alternative finance in contributing to our understanding of these areas. First, we look at disclosure, information asymmetry, and adverse selection, and how different alternative finance solutions are used to mitigate these issues. Second, we examine moral hazard and risk taking and how these behaviours are shaped by new types of alternative finance. Third, we consider the role of control rights, and show how their importance varies by context including types of alternative finance and the country-level institutional setting.

The role of political connections has been highlighted as an important influence on firm behaviour and value. We argue that political connections are just part of a wider pool of connections such as those with regulatory bodies and government officials. Using a quasi-experiment, we provide empirical evidence that broader directors' connections reduce company risk. More specifically, we find a negative and significant relationship between directors with both government and regulatory bodies' connections and company risk. Interestingly, we find that connected female directors are less risk-averse compared with their male counterparts. Our results also reveal that connected directors, though offered generous compensation packages, do not necessarily generate higher stock abnormal performance. Therefore, shareholders of financial companies should consider the trade-off between the incremental costs and benefits of appointing connected directors. The paper provides helpful insights for regulators and wider stakeholder groups.

We examine the liquidity provision premium in cryptocurrency markets using the returns from the short reversal strategy. We show that returns from liquidity provision can be predicted using the volatility index, realized variance, risk aversion, crash risk, tail risk, and innovations of Tether liquidity. We also find that<br/>an increase in the liquidity provision premium is associated with a decline in liquidity, trading volume, and transaction count, as well as more withdrawals, higher fees, and greater impermanent loss on Uniswap.<br/>This suggests potential competition between centralized and decentralized exchanges. Further, the liquidity provision premium of stock markets in China and Japan positively predicts the premium of cryptocurrency markets (effect of a common shock), meanwhile that of stock markets in the US and Canada negatively predicts the premium of cryptocurrency markets (substitution effect).

We examine whether the effect of increased creditor rights on corporate borrowing depends on firm's access to internal capital. By exploiting a creditor protection reform in India, empirical outcomes strongly indicate that strengthening of creditor rights leads to increased corporate borrowing among firms that have constrained access to internal capital compared to business group affiliated firms, which have relatively easier access to internal capital. Further, the increased corporate borrowing by firms with constrained access to internal capital, in the post-reform period, is associated with a greater expansion of real investments, improved operational performance, and better market valuation. Taken together, these findings indicate that expanding creditor rights may aid in improving allocative efficiency.

We conjecture that marketplace lending provokes an increase in the quantity of entrepreneurship, particularly in more regionally disadvantaged areas, albeit at lower average quality. Using a fuzzy regression discontinuity design that exploits exogenous variation in borrowers’ access to marketplace loans along U.S. state borders, we estimate a 10% increase in marketplace lending causes a 0.44% increase in business establishments per capita. The effects are more pronounced for less experienced entrepreneurs, for small and less profitable firms, firms more dependent upon external finance, in industries with lower sunk costs of entry, and for low-income regions with inferior access to financial institutions.