Internal capital market subsidies and industry downturns

Charles A. Brown and Chris R. McNeil

Accounting and Finance, 2008, vol. 48, issue 3, 337-361

Abstract: We examine whether multisegment firms tend to subsidize operations doing business in industries that experience a major downturn in investment opportunities. The results provide little evidence of subsidization. The likelihood of discontinuation of multisegment operations in these industries does not statistically differ from that of single‐segment operations. Similarly, patterns of capital expenditures after the shock do not materially deviate between multisegment and single‐segment operations. These results indicate that the internal capital markets of multisegment firms are no less (and no more) efficient than that of single‐segment firms in their reaction to a shock to investment opportunities.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/j.1467-629X.2007.00250.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:48:y:2008:i:3:p:337-361

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().