Corporate diversification, vertical integration, and internal capital markets: A cross-country study

Joshua D. Shackman
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Joshua D. Shackman: Touro University International

Management International Review, 2007, vol. 47, issue 4, No 1, 479-504

Abstract: Abstract Abstract and Key Results ▪ In this paper I test the theory that internal capital markets are a motivation for both corporate diversification and vertical integration. I use a sample of 1560 firms from 39 countries. ▪ Using this data I also test theories about vertical integration and capital market development. I also test agency cost and taxation theories of diversification and vertical integration. ▪ I find a significant and negative relationship between corporate diversification and capital market development ▪ I find a significant and positive relationship between vertical integration and capital market development.

Keywords: Diversification; Vertical Integration; Shareholder Protection; Capital Market Development (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1007/s11575-007-0027-z

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