Subsidiary debt, capital structure and internal capital markets

• 成果类型: Article
• 署名作者: Kolasinski, Adam C.
• 署名单位: University of Washington; University of Washington Seattle
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.12.005
• 发表日期: 2009
• 页码: 327-343
• 关键词: capital structure; internal capital markets; Empirical corporate finance; Subsidiary debt

摘要

I study external debt issued by operating subsidiaries of diversified firms. Consistent with Kahn and Winton's [2004. Moral hazard and optimal subsidiary structure for financial institutions. Journal of Finance 59,2537-2575] model, where subsidiary debt mitigates asset substitution, I find firms are more likely to use subsidiary debt when their divisions vary more in risk. Consistent with subsidiary debt mitigating the free cash flow problem, I find that subsidiaries are more likely to have their own external debt when they have fewer growth options and higher cash flow than the rest of the firm. Finally, I find that subsidiary debt mitigates the corporate socialism and poaching problems modeled in theories of internal capital markets. (C) 2009 Elsevier B.V. All rights reserved.