Comparing the Investment Behavior of Public and Private Firms
|Abstract:||We evaluate differences in investment behavior between stock market listed and privately held firms in the U.S. using a rich new data source on private firms. Listed firms invest less and are less responsive to changes in investment opportunities compared to observably similar, matched private firms, especially in industries in which stock prices are particularly sensitive to current earnings. These differences do not appear to be due to unobserved differences between public and private firms, how we measure investment opportunities, life cycle differences, or our matching criteria. We suggest that the patterns we document are most consistent with theoretical models emphasizing the role of managerial myopia.|
|Appears in Collections:||Finance Working Papers|
Items in FDA are protected by copyright, with all rights reserved, unless otherwise indicated.