Essays in corporate finance: Organizational form, financing and innovation | Posted on:2008-07-11 | Degree:Ph.D | Type:Dissertation | University:University of Michigan | Candidate:Seru, Amit | Full Text:PDF | GTID:1449390005467411 | Subject:Business Administration | Abstract/Summary: | | A firm's value consists of the value of its assets in place and the value of its growth options. In my dissertation I focus on understanding how a firm's internal organization and its capital structure interact with its growth options - and hence its value. I hypothesize that firms that want to generate value through innovation would prefer an organizational design and a capital structure that allow for more discretion to managers on long term projects. In accordance with this I show that the conglomerate organizational form has a negative impact on the novelty of corporate R&D activity. The drop in R&D productivity is costly for the firm since it results in a lower market value. Moreover, I present evidence that lack of commitment, weak incentives and asymmetric information are responsible for the impact diversified organizational form has on R&D productivity. I also show that arms length financing (such as public debt and equity) is preferred by more innovative firms, whereas less innovative firms tend to use relationship-based borrowing (such as bank borrowing). | Keywords/Search Tags: | Organizational form, Value | | Related items |
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