Market structure and the value of growth

Keith W. Chauvin and Mark Hirschey
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Keith W. Chauvin: School of Business, University of Kansas, Lawrence, KS, USA, Postal: School of Business, University of Kansas, Lawrence, KS, USA
Mark Hirschey: School of Business, University of Kansas, Lawrence, KS, USA, Postal: School of Business, University of Kansas, Lawrence, KS, USA

Managerial and Decision Economics, 1997, vol. 18, issue 3, 247-254

Abstract: In line with theory suggested by Miller and Modigliani (1961), this paper finds generally positive and statistically significant effects of growth on the current market value of the firm over the 1974-90 period. This intuitive result is not surprising, but the lack of a simple link between the valuation effects of growth and market structure considerations is noteworthy. Importantly, the value of future growth options appears to be closely tied to the firm's ongoing investment in advertising and R&D intangible capital. On the other hand, high current market share does not appear to offer any clear advantage in terms of a firm's ability to expand upon current success. © 1997 John Wiley & Sons, Ltd.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:18:y:1997:i:3:p:247-254

DOI: 10.1002/(SICI)1099-1468(199705)18:3<247::AID-MDE809>3.0.CO;2-Y

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