Handbook of Corporate Finance Empirical Corporate Finance Volume 1

434 V. Maksimovic and G. Phillips on whether the firm is a conglomerate, denoted by the indicator variablesDitwhich takes on the ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 435 econometric techniques in an attempt to control for the endogeneity o ...

436 V. Maksimovic and G. Phillips capital stock. In their view a firm that operates in industries that have a greater disparity ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 437 different types of expansion paths, given different investment opport ...

438 V. Maksimovic and G. Phillips they have motivated several of the empirical studies we examine below. In the interest of brev ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 439 Thus, Stein suggests that diversification is value increasing when va ...

440 V. Maksimovic and G. Phillips Diversification may also yield concrete career benefits, because experience running a complex ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 441 manager’s utility function because it affects the value of his propri ...

442 V. Maksimovic and G. Phillips to expropriate investors. While such distortions might occur in more complex agency models, wh ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 443 likely outcomes of bargaining over the surplus and make investment ch ...

444 V. Maksimovic and G. Phillips Arguably, if investment patterns in conglomerates can be predicted by a neoclassical model, th ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 445 Fig. 2. Optimal production with differing ability across industries. ...

446 V. Maksimovic and G. Phillips Fig. 3. Market-to-book value contour plot. one industry are likely to be relatively less produ ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 447 the firm. Each band in the figure represents firms with equal market ...

448 V. Maksimovic and G. Phillips Fig. 4. Ability by segment. Model with no common managerial ability across industries. thus co ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 449 Fig. 5. Ability by segment. Model with common managerial ability acro ...

450 V. Maksimovic and G. Phillips Investment decisions of conglomerate firms We next review the recent evidence on the conglom ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 451 is usually proxied by the firm’s average Tobin’sq.^25 For conglomerat ...

452 V. Maksimovic and G. Phillips Shin and Stulz’s results suggest that conglomerates may invest less efficiently than single-se ...

Ch. 8: Conglomerate Firms and Internal Capital Markets 453 other unknowns. Because the estimator provides estimates ofE(q ̃j^2 ) ...