The dark side of internal capital markets II: evidence from diversified conglomerates
Gespeichert in:
| Beteilige Person: | |
|---|---|
| Format: | Buch |
| Sprache: | Englisch |
| Veröffentlicht: |
Cambridge, Mass.
1998
|
| Schriftenreihe: | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series
6352 |
| Schlagwörter: | |
| Links: | http://papers.nber.org/papers/w6352.pdf |
| Abstract: | This paper is an empirical examination of capital allocation in a sample of 165 diversified conglomerates in 1979. I find that divisions in high-Q manufacturing industries tend to invest less than their stand-alone industry peers, while divisions in low-Q manufacturing industries tend to invest more than their stand-alone industry peers. This sort of socialism in which investment tends to get equalized across divisions is particularly pronounced in a conglomerate's smaller divisions. It is also more pronounced in firms in which management has small equity stakes suggesting that agency problems between corporate headquarters and investors are at the root of the problem. By 1994, only 53 (32%) of these firms continue to be free-standing diversified conglomerates. Fifty-five (33%) choose to sell off unrelated divisions and focus on one core business. These firms tend to sell their smaller divisions do, their investment behavior changes relative to 1979: it more closely resembles that of their stand-alone industry peers. The remaining 57 (35%) firms were acquired or (in two cases) liquidated. |
| Umfang: | 35 S. |
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| 490 | 1 | |a National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |v 6352 | |
| 520 | 3 | |a This paper is an empirical examination of capital allocation in a sample of 165 diversified conglomerates in 1979. I find that divisions in high-Q manufacturing industries tend to invest less than their stand-alone industry peers, while divisions in low-Q manufacturing industries tend to invest more than their stand-alone industry peers. This sort of socialism in which investment tends to get equalized across divisions is particularly pronounced in a conglomerate's smaller divisions. It is also more pronounced in firms in which management has small equity stakes suggesting that agency problems between corporate headquarters and investors are at the root of the problem. By 1994, only 53 (32%) of these firms continue to be free-standing diversified conglomerates. Fifty-five (33%) choose to sell off unrelated divisions and focus on one core business. These firms tend to sell their smaller divisions do, their investment behavior changes relative to 1979: it more closely resembles that of their stand-alone industry peers. The remaining 57 (35%) firms were acquired or (in two cases) liquidated. | |
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| geographic | USA |
| geographic_facet | USA |
| id | DE-604.BV011808768 |
| illustrated | Not Illustrated |
| indexdate | 2024-12-20T10:18:59Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-007973597 |
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| physical | 35 S. |
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| series | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| series2 | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| spelling | Scharfstein, David S. Verfasser aut The dark side of internal capital markets II evidence from diversified conglomerates David S. Scharfstein Cambridge, Mass. 1998 35 S. txt rdacontent n rdamedia nc rdacarrier National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 6352 This paper is an empirical examination of capital allocation in a sample of 165 diversified conglomerates in 1979. I find that divisions in high-Q manufacturing industries tend to invest less than their stand-alone industry peers, while divisions in low-Q manufacturing industries tend to invest more than their stand-alone industry peers. This sort of socialism in which investment tends to get equalized across divisions is particularly pronounced in a conglomerate's smaller divisions. It is also more pronounced in firms in which management has small equity stakes suggesting that agency problems between corporate headquarters and investors are at the root of the problem. By 1994, only 53 (32%) of these firms continue to be free-standing diversified conglomerates. Fifty-five (33%) choose to sell off unrelated divisions and focus on one core business. These firms tend to sell their smaller divisions do, their investment behavior changes relative to 1979: it more closely resembles that of their stand-alone industry peers. The remaining 57 (35%) firms were acquired or (in two cases) liquidated. Ökonometrisches Modell Capital budget United States Econometric models Capital investments United States Econometric models Conglomerate corporations United States Finance Econometric models Resource allocation Econometric models USA Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 6352 (DE-604)BV002801238 6352 http://papers.nber.org/papers/w6352.pdf kostenfrei Volltext |
| spellingShingle | Scharfstein, David S. The dark side of internal capital markets II evidence from diversified conglomerates National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series Ökonometrisches Modell Capital budget United States Econometric models Capital investments United States Econometric models Conglomerate corporations United States Finance Econometric models Resource allocation Econometric models |
| title | The dark side of internal capital markets II evidence from diversified conglomerates |
| title_auth | The dark side of internal capital markets II evidence from diversified conglomerates |
| title_exact_search | The dark side of internal capital markets II evidence from diversified conglomerates |
| title_full | The dark side of internal capital markets II evidence from diversified conglomerates David S. Scharfstein |
| title_fullStr | The dark side of internal capital markets II evidence from diversified conglomerates David S. Scharfstein |
| title_full_unstemmed | The dark side of internal capital markets II evidence from diversified conglomerates David S. Scharfstein |
| title_short | The dark side of internal capital markets II |
| title_sort | the dark side of internal capital markets ii evidence from diversified conglomerates |
| title_sub | evidence from diversified conglomerates |
| topic | Ökonometrisches Modell Capital budget United States Econometric models Capital investments United States Econometric models Conglomerate corporations United States Finance Econometric models Resource allocation Econometric models |
| topic_facet | Ökonometrisches Modell Capital budget United States Econometric models Capital investments United States Econometric models Conglomerate corporations United States Finance Econometric models Resource allocation Econometric models USA |
| url | http://papers.nber.org/papers/w6352.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT scharfsteindavids thedarksideofinternalcapitalmarketsiievidencefromdiversifiedconglomerates |