Choosing to Cofinance: Analysis of Project-Specific Alliances in the Movie Industry

Darius Palia; S. Abraham Ravid; Natalia Reisel

doi:10.1093/rfs/hhm064

Choosing to Cofinance: Analysis of Project-Specific Alliances in the Movie Industry

Darius Palia^1,2,3; S. Abraham Ravid^3,4; Natalia Reisel⁵

¹ Rütgers (Germany) · ² Rutgers Sexual and Reproductive Health and Rights · ³ Rutgers, The State University of New Jersey · ⁴ Cornell University · ⁵ Southern Methodist University

Review of Financial Studies 2008

We use a movie industry project-by-project dataset to analyze the choice of financing a project internally versus financing it through outside alliances. The results indicate that project risk is positively correlated with alliance formation. Movie studios produce a variety of films and tend to develop their safest projects internally. Our findings are consistent with internal capital market explanations. We find mixed evidence regarding resource pooling, i.e., sharing the cost of large projects. Finally, the evidence shows that projects developed internally perform similarly to projects developed through outside alliances.

DOI: 10.1093/rfs/hhm064
Volume: 21 (2)
Pages: 483-511
Language: en
Export: BibTeX
Sources: openalex crossref