Leverage and internal capital markets: evidence from leveraged recapitalizations

• 成果类型: Article
• 署名作者: Peyer, UC; Shivdasani, A
• 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(00)00094-5
• 发表日期: 2001
• 页码: 477-515
• 关键词: Leverage; INVESTMENT; recapitalization; Internal capital market

摘要

We study the internal allocation of resources for diversified firms that complete a leveraged recapitalization. Before the recapitalization, internal capital markets allocate investment to high q segments. After the recapitalization, segment investment becomes less sensitive to q and more sensitive to segment cash how. We show that firm value is positively related to investment's sensitivity to segment q and negatively related to investments sensitivity to segment cash fl;ow. Our analysis highlights an indirect cost of debt that has received little attention: pressure to meet interest obligations creates an incentive to emphasize investments that generate high levels of current cash flow. (C) 2001 Elsevier Science S.A. All rights reserved. JEL classification: G31; G32; G34.