Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Beyond internal capital markets
T2 - the in-house transmission of adverse sales shocks and the collateral channel
AU - Chang, Yuk Ying
AU - Dasgupta, Sudipto
PY - 2007/12
Y1 - 2007/12
N2 - We study how shocks to some business segments affect investment in a firm's non-shock segments. We find that subsequent investment in the non-shock segments is significantly lower compared to segments of firms that do not experience shocks. Surprisingly, lower availability of internal funds does not account for the lower investment. We find that segment shocks propagate within the firm by decreasing the value of collateral assets and reducing the availability of external finance. Our results support the operation of an external finance collateral channel ([Kiyotaki, N., Moore, J., 1997. Credit cycles. Journal of Political Economy 105, 211–248.]) previously discussed in the literature.
AB - We study how shocks to some business segments affect investment in a firm's non-shock segments. We find that subsequent investment in the non-shock segments is significantly lower compared to segments of firms that do not experience shocks. Surprisingly, lower availability of internal funds does not account for the lower investment. We find that segment shocks propagate within the firm by decreasing the value of collateral assets and reducing the availability of external finance. Our results support the operation of an external finance collateral channel ([Kiyotaki, N., Moore, J., 1997. Credit cycles. Journal of Political Economy 105, 211–248.]) previously discussed in the literature.
KW - Internal capital markets
KW - Collateral channel
KW - Tansmission mechanism
U2 - 10.1016/j.jcorpfin.2007.02.001
DO - 10.1016/j.jcorpfin.2007.02.001
M3 - Journal article
VL - 13
SP - 743
EP - 770
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
IS - 5
ER -