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Author : Mark D. Walker
Publisher :
ISBN 13 :
Total Pages : 134 pages
Book Rating : 4.:/5 (318 download)
Download or read book Internal Capital Markets and Investment Efficiency written by Mark D. Walker and published by . This book was released on 2001 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book How Does Internal Capital Markets Relate to Investment Efficiency?. written by and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Gayané Hovakimian
Publisher :
ISBN 13 :
Total Pages : 46 pages
Book Rating : 4.:/5 (129 download)
Download or read book Financial Constraints and Investment Efficiency written by Gayané Hovakimian and published by . This book was released on 2010 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: The extent to which conglomerates face frictions in external capital markets has implications for their internal capital allocation. We find that, during recessions, when external financing costs are higher, conglomerates improve the efficiency of internal capital markets by increasing the allocation of funds to high q divisions relative to low q divisions. The improvement is significantly higher for conglomerates that are likely to face more binding financial constraints. This evidence suggests that although financial constraints impair managers' ability to undertake positive net present value projects, they improve the quality of project selection by reducing free cash flow and pressuring managers to fund the more valuable investment opportunities. It is consistent with theories stressing the benefits of internal capital markets in the presence of external capital market imperfections.
Author : Seoungpil Ahn
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (129 download)
Download or read book Internal Capital Markets and Investment Policy written by Seoungpil Ahn and published by . This book was released on 2001 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze changes in investment policy following 106 spinoffs completed by diversified firms between 1981 and 1996. Prior to the spinoff, the sample firms are valued at a discount relative to a portfolio of comparable single-segment firms, and allocate funds inefficiently, investing too little in high-q segments. Following the spinoff, there is a significant improvement in investment efficiency and the diversification discount is eliminated. Furthermore, changes in excess value around the spinoff are positively related to changes in measures of investment efficiency. These findings support the view that (i) diversified firms allocate investment funds inefficiently, and (ii) by breaking up the conglomerate, spinoffs create value by improving investment efficiency.
Author : Ms.Yu Shi
Publisher : International Monetary Fund
ISBN 13 : 1498316352
Total Pages : 39 pages
Book Rating : 4.4/5 (983 download)
Download or read book Internal Capital Markets in Business Groups and the Propagation of Credit Supply Shocks written by Ms.Yu Shi and published by International Monetary Fund. This book was released on 2019-05-21 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using business registry data from China, we show that internal capital markets in business groups can propagate corporate shareholders’ credit supply shocks to their subsidiaries. An average of 16.7% local bank credit growth where corporate shareholders are located would increase subsidiaries investment by 1% of their tangible fixed asset value, which accounts for 71% (7%) of the median (average) investment rate among these firms. We argue that equity exchanges is one channel through which corporate shareholders transmit bank credit supply shocks to the subsidiaries and provide empirical evidence to support the channel.
Author : Stijn Claessens
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (16 download)
Download or read book The Benefits and Costs of Group Affiliation written by Stijn Claessens and published by . This book was released on 2002 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the benefits and associated agency costs of using internal capital markets through affiliating with groups using data of two thousand firms from nine East Asian economies between 1994-96. We find that mature and slow-growing firms with ownership structures more likely to create agency problems gain more from group affiliation, while young and high-growth firms more likely lose. Agency problems are important explanatory factors of firm value in economies outside Japan, but less so in Japan. Consistent with the literature, financially-constrained firms benefit from group affiliation. Our results are robust to different time periods and estimation techniques.
Author : Frédéric S. Mueller
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (896 download)
Download or read book Capital Investment Management written by Frédéric S. Mueller and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Young Jun Cho
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)
Download or read book Segment Disclosure Transparency and Internal Capital Market Efficiency written by Young Jun Cho and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using the adoption of SFAS 131, I examine the effect of segment disclosure transparency on internal capital market efficiency. SFAS 131 requires firms to define segments as internally viewed by managers, thereby improving the transparency of managerial actions in internal capital allocation. I find that diversified firms that improved segment disclosure transparency by changing segment definitions upon adoption of SFAS 131 experienced an improvement in capital allocation efficiency in internal capital markets after the adoption of SFAS 131. In addition, I find that the improvement in internal capital market efficiency was greater for firms that suffered more severe agency problems before the adoption of SFAS 131 and also for firms whose managers faced stronger incentives to improve efficiency after the adoption of SFAS 131. My results suggest that more transparent segment information can help resolve agency conflicts in the internal capital markets of diversified firms, thus improving investment efficiency.
Author : Claire A. Hill
Publisher : Edward Elgar Publishing
ISBN 13 : 1784711489
Total Pages : 497 pages
Book Rating : 4.7/5 (847 download)
Download or read book Research Handbook on Mergers and Acquisitions written by Claire A. Hill and published by Edward Elgar Publishing. This book was released on 2016-09-30 with total page 497 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global in scope and written by leading scholars in the field, the Research Handbook on Mergers and Acquisitions is a modern-day survey of the state of M&A. Its chapters explore the history of mergers and acquisitions and also consider the theory behind the structure of modern transaction documentation. The book also address other key M&A issues, such as takeover defenses; judges and practitioners' perspectives on litigation; the appraisal remedy and other aspects of Federal and state law, as well as M&A considerations in the structure of start-ups. This Handbook will be an invaluable resource for scholars, practitioners, judges and legislators.
Author : Robert H. Gertner
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.X/5 (2 download)
Download or read book Internal Versus External Capital Markets written by Robert H. Gertner and published by . This book was released on 1994 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a framework for analyzing the costs and benefits of internal vs. external capital allocation. We focus primarily on comparing an internal capital market to bank lending. While both represent centralized forms of financing, in the former case the financing is owner-provided, while in the latter case it is not. We argue that the ownership aspect of internal capital allocation has three important consequences: 1) it leads to more monitoring than bank lending; 2) it reduces managers' entrepreneurial incentives; and 3) it makes it easier to efficiently redeploy the assets of projects that are performing poorly under existing management.
Author : Seung Hun Han
Publisher :
ISBN 13 :
Total Pages : 78 pages
Book Rating : 4.:/5 (113 download)
Download or read book Internal Capital Markets and Bank Relationship-evidence from Japanese Corporate Spin-offs written by Seung Hun Han and published by . This book was released on 2005 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt: The second study analyzes the investment policy changes in internal capital markets and the effect of banks' monitoring on the investment changes using Japanese corporate spin-offs, including merger-facilitated spin-offs within conglomerates. We find that investment sensitivity increases significantly after internal restructuring through spin-offs, consistent with Gertner et al. (2002). Furthermore, our results show that bank-related spin-offs' investments are more sensitive to investment opportunities, Tobin's Q, after being spun off. This suggests that the efficiency of Japanese internal capital markets has increased through spin-offs after the financial deregulation in 2001. We conclude that banks seem to play significant monitoring roles in internal capital markets to increase the investment efficiency after spin-offs. This paper is now co-authored with Professor Yoon K. Choi.
Author : Moritz Meyer
Publisher : GRIN Verlag
ISBN 13 : 3668722676
Total Pages : 86 pages
Book Rating : 4.6/5 (687 download)
Download or read book The use of internal Capital Markets based on the example of Next & New Look written by Moritz Meyer and published by GRIN Verlag. This book was released on 2018-06-12 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: Scientific Study from the year 2018 in the subject Economics - Finance, grade: 80%, University of Strathclyde, language: English, abstract: This report tries to examine New Look's decision for the new acquirement by analysing the firm's performance in the last five years, internal capital markets (ICM), corporate governance and ownership structure, as well as advantages and disadvantages of acquiring a firm backed by a PE investor. Finally, the last element of the analysis is the evaluation of the benefits and costs of New Look as a standalone firm, if Brait would undertake successfully an initial public offering (IPO) process to exit from New Look. In the conclusion, we provide a recommendation for the exit strategy of Brait from New Look, if the objective is either to maximise the return to the Limited Partners (LPs) or Brait acts in the best interests of New Look. New Look Retail Group Limited (New Look) is an international multichannel retail brand, offering value-fashion for women, men, and teenage girls. The company has more than 900 stores, which are mostly based in the United Kingdom (UK). Its e-commerce grew sustainably over the last years and serves customers in 120 countries worldwide. Since 2015, New Look is owned by Brait Societas Europaea (Brait), a private equity (PE) firm. It is now rumoured that the UK based retailer Next Public Limited Company (Next) is preparing a takeover bid for New Look.
Author : Dobrina Georgieva Jandik
Publisher :
ISBN 13 :
Total Pages : 46 pages
Book Rating : 4.:/5 (13 download)
Download or read book Adoptions and Eliminations of Economic Profit Plans and Internal Capital Markets Efficiency written by Dobrina Georgieva Jandik and published by . This book was released on 2013 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Internal capital markets of diversified firms have been associated with inefficient allocation of investment funds across divisions, leading to value losses. Utilizing a sample of diversified firms that adopted or eliminated Economic Profit Plans (EPPs) between 1990 and 2009, we show that adoptions of those plans (that reward profitability, but penalize excessive capital investment) mitigate investment distortions and lead to value gains. Following the adoption of EPPs, diversified firms start allocating investment funds based on growth opportunities of their divisions. EPP adopters lower their divisional investment levels, especially in segments with below-average growth opportunities. The overall investment allocation efficiency improves, and the diversification discount diminishes after the adoption of EPPs. However, EPPs appear to be used only as temporary tools for assessing corporate performance. The plans are adopted primarily by firms expected to immediately generate plan bonuses for management, and they are frequently eliminated by firms with bad accounting performance, and low managerial bonuses. The study contributes to the literature on organizational efficiency, internal capital markets and on the importance of measures based on economic profits or residual income.
Author : G. Constantinides
Publisher : Elsevier
ISBN 13 : 9780444513632
Total Pages : 698 pages
Book Rating : 4.5/5 (136 download)
Download or read book Handbook of the Economics of Finance written by G. Constantinides and published by Elsevier. This book was released on 2003-11-04 with total page 698 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arbitrage, State Prices and Portfolio Theory / Philip h. Dybvig and Stephen a. Ross / - Intertemporal Asset Pricing Theory / Darrell Duffle / - Tests of Multifactor Pricing Models, Volatility Bounds and Portfolio Performance / Wayne E. Ferson / - Consumption-Based Asset Pricing / John y Campbell / - The Equity Premium in Retrospect / Rainish Mehra and Edward c. Prescott / - Anomalies and Market Efficiency / William Schwert / - Are Financial Assets Priced Locally or Globally? / G. Andrew Karolyi and Rene M. Stuli / - Microstructure and Asset Pricing / David Easley and Maureen O'hara / - A Survey of Behavioral Finance / Nicholas Barberis and Richard Thaler / - Derivatives / Robert E. Whaley / - Fixed-Income Pricing / Qiang Dai and Kenneth J. Singleton.
Author : Sumit Agarwal
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (129 download)
Download or read book The Efficiency of Internal Capital Markets written by Sumit Agarwal and published by . This book was released on 2012 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We empirically examine whether greater firm diversity results in the inefficient allocation of capital. Using both COMPUSTAT and the Annual Capital Expenditure Survey (ACES) we find firm diversity to be negatively related to the efficiency of investment. However once we distinguish between capital expenditure for structures and equipment, we find that while firms do inefficiently allocate capital for equipment, they efficiently allocate capital for structures. These results suggest that when the decision will have long-lasting repercussions, headquarters will, more often than not, make the correct choice.
Author : Young Jun Cho
Publisher :
ISBN 13 :
Total Pages : 79 pages
Book Rating : 4.:/5 (826 download)
Download or read book Segment Disclosures, Internal Capital Markets, and Firm Value written by Young Jun Cho and published by . This book was released on 2011 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using the adoption of SFAS 131 as an exogenous change in disclosure quality of segment information, this study examines the impact of SFAS 131 on internal capital market efficiency and firm value. It finds that diversified firms that changed their segment definitions on adopting SFAS 131 (i.e., "change firms") experienced greater improvement in capital allocation efficiency in internal capital markets in the postSFAS 131 period relative to the pre-SFAS 131 period than did a control sample of diversified firms that did not change their segment definitions (i.e., "no-change firms"). This result holds in a battery of tests designed to correct for the endogeneity in firms' reporting choices following SFAS 131, suggesting that disclosure quality improves external monitoring and therefore investment efficiency. This study further shows that the improvement in capital allocation efficiency was achieved primarily by firms whose boards of directors were relatively less independent in the pre-SFAS 131 period, suggesting that the strength of internal monitoring moderates the effect of disclosure quality (as a mechanism of external monitoring) on investment efficiency. In addition, it finds that proprietary costs moderate the impact of SFAS 131 on firm value. Specifically, change firms experienced a greater increase in firm value in the post-SFAS 131 period relative to the pre-SFAS 131 period than did no-change firms except for a subsample of firms with high proprietary costs, suggesting that SFAS 131 reduced agency costs but also eroded competitive advantages.
Author : Urs Peyer
Publisher :
ISBN 13 :
Total Pages : 49 pages
Book Rating : 4.:/5 (129 download)
Download or read book Internal and External Capital Markets written by Urs Peyer and published by . This book was released on 2002 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study tests the proposition that firms that make efficient use of their internal capital markets can lower the cost of transacting in the external capital market. Using a large panel data set of diversified firms from 1980-1998, I show that diversified firms with an efficient internal capital allocation display a higher propensity to use external capital relative to comparable single segment firms. This result is robust to including other controls, such as measures of information asymmetry, capital needs, relative valuation and firm size. Further, a higher use of external capital by diversified firms relative to single segment firms is associated with a higher excess value, but only for efficient internal capital market users. I also demonstrate the robustness of these findings by employing a sample of firms that experience an increase in expected investment outlays. My findings support predictions from theoretical models, such as Stein (1997), and are consistent with the interpretation that diversified firms with an efficient internal capital market benefit from lower-cost access to external capital by alleviating information asymmetry problems between managers and investors.
