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| Tekijä: | Goldman, E. |
| Otsikko: | The impact of stock market information production on internal resource allocation |
| Lehti: | Journal of Financial Economics
2004 : JAN, VOL. 71:1, p. 143-167 |
| Asiasana: | Market information Resource allocation Spin-offs Stock markets |
| Kieli: | eng |
| Tiivistelmä: | The resource allocation decision of a manager is analyzed inside a multidivisional company whose compensation is based on the company's stock price. It is found that internal investments exhibit a positive correlation across the company's divisions. Namely, when two single-division companies merge the optimal investment level in one division becomes more positively related to the investment level in the other division. Additionally, following a spinoff, divisional investments decline (increase) whenever the separated division has a project with a low (high) Sharpe ratio. Finally, multidivion companies trade at a discount which is larger the more diverse the investment sets of the divisions. |
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