Corporate governance and internal capital markets
By: Zacharias Sautner, Belén Villalonga
Contributors: Villalonga, Belen; Harvard Business School
Series: Working paper / Harvard Business School -- 10-100; Working paper (Harvard Business School) -- 10-100.
Publisher: Harvard Business School
Published: 2010
Place of publication: [Boston]
Language: eng
Number of pages: 45
Description: We exploit an exogenous shock to corporate ownership structures created by a recent tax reform in Germany to explore the link between corporate governance and internal capital markets. We find that firms with more concentrated ownership are less diversified and have more efficient internal capital markets. Our findings provide direct evidence in support of Scharfstein and Stein's (2000) model, which suggests that internal capital misallocations are partly a result of poor corporate governance. We also provide evidence of a channel through which the benefits of ownership concentration outweigh its costs.
Notes: "May 2010"--Publisher's website.

Includes bibliographical references.