Managerial incentives and internal capital markets

• 成果类型: Article
• 署名作者: De Motta, A
• 署名单位: McGill University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/1540-6261.00563
• 发表日期: 2003
• 页码: 1193-1220
• 关键词: INEFFICIENT INVESTMENT; INFORMATION; diversification

摘要

Capital budgeting in multidivisional firms depends on the external assessment of the whole firm, as well as on headquarters' assessment of the divisions. While corporate headquarters may create value by directly monitoring divisions, the external assessment of the firm is a public good for division managers who, consequently, are tempted to free ride. As the number of divisions increases, the free-rider problem is aggravated, and internal capital markets substitute for external capital markets in the provision of managerial incentives. The analysis relates the value of diversification to characteristics of the firm, the industry, and the capital market.