Journal of Corporate Finance Vol. 71 2021
Firm listing status and the investment home bias
Abstract
Are public firm investment rates more sensitive than private firm rates to new investment opportunities? We offer a new explanation for differences in public and private firm investment sensitivities: investment sensitivities differ because the type of investments favored by firms varies with their listing status. Specifically, we consider the geography of investment opportunities and find that private firms have a much stronger investment home-bias than similar public firms which makes their investment decisions more sensitive to local investment opportunities than public firms. Controlling for local investment opportunities explains four-fifths of the differential sensitivity between public and private firms not explained by more traditional measures of investment opportunities.
- DOI
- 10.1016/j.jcorpfin.2021.102095
- Volume
- 71
- Pages
- 102095
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref