Does Firm Investment Respond to Peers' Investment?

• 成果类型: Article
• 署名作者: Cecilia Bustamante, M.; Fresard, Laurent
• 署名单位: University System of Maryland; University of Maryland College Park; Universita della Svizzera Italiana; Swiss Finance Institute (SFI)
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3695
• 发表日期: 2021
• 页码: 4703-4724
• 关键词: investment; Peer effect; COMPETITION; agglomeration economies

摘要

We study whether, how, and why the investment of a firm depends on the investment of other firms in the same product market. Using an instrumental variable based on the presence of local knowledge externalities, we find a sizeable complementarity of investment among product market peers, holding across a large majority of sectors. Peer effects are stronger in concentrated markets, featuring more heterogeneous firms, and for smaller firms with less precise information. Our findings are consistent with a model in which managers are imperfectly informed about fundamentals and use peers' investments as a source of information. Product market peer effects in investment could amplify shocks in production networks.