Internal capital markets and the competition for corporate resources

Article Abstract:

This article examines the role of corporate headquarters in allocating scarce resources to competing projects in an internal capital market. Unlike a bank, headquarters has control rights that enable it to engage in "winner-picking" - the practice of actively shifting funds from one project to another. By doing a good job in the winner-picking dimension, headquarters can create value even when it cannot help at all to relax overall firm-wide credit constraints. The model implies that internal capital markets may sometimes function more efficiently when headquarters oversees a small and focused set of projects. (Reprinted by permission of the publisher.)

Finance, Capital market, Capital markets, Corporations, Corporate finance, Resource allocation

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Bad news travels slowly: size, analyst coverage, and the profitability of momentum strategies

Article Abstract:

Specific information about the value of a firm's stocks, especially negative information, tends to spread slowly among the investing public. Momentum profitability declines with firm size, momentum strategies work best with stocks with low analyst coverage, and stocks that have significantly lost are more affected by analysis than past winners.

Evaluation, Stocks

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Dividend changes and the persistence of past earnings changes

Article Abstract:

A study on market's interpretations of changes in dividend policy of a business enterprise is presented. The study examines whether market associates changes in dividend payout with changes in earnings of the business enterprise.

United Kingdom, Corporate Profits, Dividend Policy, Profit, Profits, Company dividends

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