LYANDRES · Theoretical and empirical examination of the effects of shareholder diversification and mode of incorporation on firms' strategies and outcomes
7РП — „Хора“ (Действия „Мария Кюри“)
- Период
- 2012-10-01 → 2017-06-01
- Финансиране от ЕС
- 100 000 €
- Участници
- 1
- Схема
- MC-CIG
Линиите свързват координатора с партньорите.
Накратко на български
Разпределението на инвестициите на собствениците в различни компании влияе върху това колко капитал влагат в конкретния си бизнес. Това помага да се разбере как финансовите ограничения и видът на фирмата променят стратегическите решения на собствениците.
Кратко обяснение, генерирано от езиков модел по текста на CORDIS. Оригиналът е по-долу.
Резултати накратко
Theoretical and empirical examination of the effects of shareholder diversification and mode of incorporation on firms' strategies and outcomes
This project examines empirically the effects of portfolio diversification of controlling owners on firms' capital investment using a large sample of private and public firms. We find that investment of public firms, which tend to be relatively financially unconstrained, are positively related to their owners' portfolio diversification. This relation is economically sizable and is not driven by omitted owner characteristics, selection of firms by owners, reverse causality, or endogeneity of firms' mode of incorporation. The relation between owners' portfolio diversification and firm investment is significantly weaker and sometimes negative for private, relatively constrained firms. Our results suggest that controlling owners' portfolio diversification is an important determinant of firms' investment strategies, and that the effect of owners' diversification on investment depends crucially on the degree of financial constraints that firms face. The contribution of this project is twofold. First, we provide novel evidence on the role played by owners' portfolio diversification on corporate investment. We show that the relation between a firm's capital investment and its owner's portfolio diversification depends crucially on the firm's degree of financial constraints. Owners' diversification has a significantly positive impact on their firms' capital investment, but only for relatively financially unconstrained firms. Second, our project contributes to a small but growing empirical literature that examines differences between public and private firms' decisions. In particular, previous studies that investigate differences in public and private firms' capital investment find contrasting results. Our findings suggest that owners' portfolio diversification is an important and so far overlooked driver of firms' investment decisions. Our results have potentially relevant policy implications, given the crucial role in the economy played by private firms. Our findings suggest that to improve the allocation of capital and foster economic growth through capital investment, policy makers should not only improve firms' access to capital, but also reduce barriers to firm owners' portfolio diversification.
Текст от CORDIS, на английски · Данни: CORDIS, © Европейски съюз
Цел на проекта
In this research we are interested in examining the effects of controlling shareholder diversification on firms’ operating strategies and outcomes. Our project involves the following logical building blocks: 1.Firms vary with respect to the degree of controlling shareholder diversification. 2.Firms’ controlling shareholder diversification feeds into their objective functions and in particular, their risk taking. 3.Operating strategies (such as investment/quantity/price decisions) as well as financial strategies (such as leverage and dividends) affect both the mean and variance of profits and depend on the degree of diversification of controlling shareholders. 4.Firms’ strategies affect optimal strategies of their product market rivals. Product market competition can amplify the effects of controlling shareholders (lack of) diversification on operating and financial strategies. We contribute to the examination of the relation between owner diversification and firms’ strategies and outcomes along the following empirical and theoretical dimensions. 1.We use the most comprehensive data set (Amadeus) on both firms’ strategies and outcomes and on the diversification of controlling owners. which allows examining continuous distributions of controlling shareholders’ degrees of diversification. 2.We provide a theoretical analysis demonstrating the effects of shareholder diversification and public/private status on equilibrium ROA, profitability, and investment. 3.We examine the effects of product market competition on the differences between ROA, profitability, and investment of public and private firms and, more generally, the effects of product market competition on the relation between controlling owners’ diversification on firms’ strategies and outcomes. 4.We examine the effects of volatility shocks on the relation between controlling shareholders’ diversification on one side and ROA, profitability, sales growth, and investment on the other side.
Оригинален текст от CORDIS (на английски).
Участници
- REICHMAN UNIVERSITY · HerzliyaКоординаторИзраел
Връзки
Данни: CORDIS, © Европейски съюз