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Beyond internal capital markets: the in-house transmission of adverse sales shocks and the collateral channel

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Beyond internal capital markets : the in-house transmission of adverse sales shocks and the collateral channel. / Chang, Yuk Ying; Dasgupta, Sudipto.

In: Journal of Corporate Finance, Vol. 13, No. 5, 12.2007, p. 743-770.

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Chang, Yuk Ying ; Dasgupta, Sudipto. / Beyond internal capital markets : the in-house transmission of adverse sales shocks and the collateral channel. In: Journal of Corporate Finance. 2007 ; Vol. 13, No. 5. pp. 743-770.

Bibtex

@article{90b598d7795e4c1697cc9a5392bb86af,
title = "Beyond internal capital markets: the in-house transmission of adverse sales shocks and the collateral channel",
abstract = "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.",
keywords = "Internal capital markets, Collateral channel , Tansmission mechanism ",
author = "Chang, {Yuk Ying} and Sudipto Dasgupta",
year = "2007",
month = dec
doi = "10.1016/j.jcorpfin.2007.02.001",
language = "English",
volume = "13",
pages = "743--770",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",
number = "5",

}

RIS

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 -