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Extensive Margin Adjustment of Multi-Product Firm and Risk Diversification.

Product scope adjustment is a key mechanism through which multi-product firms achieve efficient resource allocations. In this paper, we take a novel perspective to study firms' product scope adjustment behavior through the lens of asset pricing. Using a unique panel scanner data set containing...

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Detalles Bibliográficos
Clasificación:Libro Electrónico
Autor principal: Carvalho, Carlos (Autor)
Formato: Electrónico eBook
Idioma:Inglés
Publicado: [Washington, D.C.] : International Monetary Fund, [2017]
Colección:IMF working paper ; WP/17/146.
Temas:
Acceso en línea:Texto completo
Descripción
Sumario:Product scope adjustment is a key mechanism through which multi-product firms achieve efficient resource allocations. In this paper, we take a novel perspective to study firms' product scope adjustment behavior through the lens of asset pricing. Using a unique panel scanner data set containing detailed information on products, matched with the financial information of their manufacturers, we find that multi-product firms with higher product turnover have lower financial risks and lower risk premia. To understand this channel, we propose a stylized model with a time-dependent (Calvo-type) product turnover rate to highlight the 'risk absorption channel' of product scope adjustment. In response to an economy-wide shock, a firm that can adjust its product scope more flexibly shows lower excess equity returns and lower asset volatility.
Descripción Física:1 online resource (44 pages)
ISBN:1484303768
9781484303764
1484307046
9781484307045