The impact of stock market information production on internal resource allocation

• 成果类型: Article
• 署名作者: Goldman, E
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(03)00177-6
• 发表日期: 2004
• 页码: 143-167
• 关键词: internal markets; resource allocation; spinoff; Information production

摘要

We analyze the resource allocation decision of a manager inside a multidivision firm whose compensation is based on the firm's stock price. We find that internal investments exhibit a positive correlation across the firms divisions. Namely, when two single-division firms merge the optimal investment level in one division becomes more positively related to the investment level in the other division. In addition, following a spinoff, divisional investments decline (increase) whenever the separated division has a project with a low (high) Sharpe ratio. Finally, multidivision firms trade at a discount which is larger the more diverse the investment sets of the divisions. (C) 2003 Elsevier B.V. All rights reserved.