Cross-subsidies, external financing constraints, and the contribution of the internal capital market to firm value

• 成果类型: Article
• 署名作者: Billett, MT; Mauer, DC
• 署名单位: Southern Methodist University; University of Iowa
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhg024
• 发表日期: 2003
• 页码: 1167
• 关键词: cash flow sensitivities; corporate diversification; INVESTMENT; COSTS; debt

摘要

We examine the link between the excess value of a diversified firm and the value of its internal capital market. Subsidies to small financially constrained segments with good relative investment opportunities significantly increase excess value, while transfers of resources from segments with good relative investment opportunities significantly decrease excess value. Of interest is that subsidies to small financially constrained segments with poor relative investment opportunities also significantly increase excess value. However, there is little evidence that this result depends on the diversity of a firm's investment opportunities. We conclude that financing constraints drive the relationship between the internal capital market and firm value.