| 来源类型 | Discussion paper
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| 规范类型 | 论文
|
| 来源ID | DP2595
|
| DP2595 Who is Afraid of Globalization? The Challenge of Domestic Adjustment in Europe and America |
| André Sapir
|
| 发表日期 | 2000-10-24
|
| 出版年 | 2000
|
| 语种 | 英语
|
| 摘要 | One distinguishing feature of internal capital markets is their ability to reallocate funds in favour of the most profitable divisions (winner-picking). Yet, diversified firms often trade at a discount with respect to their focused counterparts. The literature has tried to explain the apparent misallocation of resources with lobbying activities or power struggles. We show that the diversification discount can be explained even in a model where resources are efficiently allocated ex post. When managers obtain utility from the funds under their purview, moving funds across divisions may diminish their incentives. The ex ante reduction in managerial incentives can more than offset the increase in firm value due to the ex post efficient reallocation of funds.
If headquarters have some commitment power, it is in general optimal to commit not to reallocate at least a fraction of funds. As a result, the investment in a given division is (optimally) more sensitive to the division's cash flow than to other divisions' cash flow, as confirmed by the empirical studies on internal capital markets.
Our theory complements the view that links the diversification discount to the inefficient functioning of internal capital markets. |
| 主题 | Financial Economics
|
| 关键词 | Internal capital markets
Managerial incentives
Winner-picking
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| URL | https://cepr.org/publications/dp2595
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| 来源智库 | Centre for Economic Policy Research (United Kingdom)
|
| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/531663
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推荐引用方式
GB/T 7714 |
André Sapir. DP2595 Who is Afraid of Globalization? The Challenge of Domestic Adjustment in Europe and America. 2000.
|
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