Corporate Equity Ownership, Investment, and Product Market Relationships

Matthew J. Clayton*, Bjørn N. Jørgensen

*Corresponding author af dette arbejde

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Abstrakt

This paper examines the effect of corporate equity ownership on investment when firms have product market relationships. Firms have incentives to hold long equity positions when their products are complements. These equity positions induce the firms to increase their real investment expenditures. In contrast, firms have incentives to hold short equity positions when their products are substitutes. These short positions commit the firms to a more aggressive product market stance, and also result in increased real investment expenditures. Our model offers an explanation for the empirical relationship between the establishment of corporate equity stakes and increased investment spending documented by Allen and Phillips (2000).
OriginalsprogEngelsk
TidsskriftJournal of Corporate Finance
Vol/bind17
Udgave nummer5
Sider (fra-til)1377-1388
Antal sider12
ISSN0929-1199
DOI
StatusUdgivet - 2011
Udgivet eksterntJa

Emneord

  • Corporate equity holdings
  • Investments
  • Strategic interactions

Citationsformater