Financial market frictions and diversification |
| |
Authors: | Gregor Matvos Amit Seru Rui C Silva |
| |
Institution: | 1. Booth School of Business, University of Chicago, 5807 S Woodlawn Ave, Chicago, IL 60637, United States;2. National Bureau of Economic Research, United States;3. London Business School, Regent’s Park, London NW1 4SA, United Kingdom |
| |
Abstract: | We find new facts that relate the evolution of firm scope to the changing frictions in external capital markets over the last three decades. We find that large, diversified publicly traded firms increase their scope during times of high external capital market frictions, such as in the recent Great Recession. Moreover, during these times firms diversify their investment needs and cash flow across industries. We also find similar phenomena outside diversified public firms. Examining the mergers and acquisitions activity of stand-alone and diversified private firms, we uncover similar patterns. In aggregate data, we find that the composition of mergers shifts from focused to diversifying and back with changes in external market conditions. Our evidence is broadly consistent with the notion that firms diversify their scope in response to tightening in external capital markets. |
| |
Keywords: | Theory of firm Firm boundaries Conglomerates Diversification Internal capital markets D92 E22 G01 G3 L21 L25 |
本文献已被 ScienceDirect 等数据库收录! |
|