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Does the market matter for more than investment?

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  • Smith, Jason

Abstract

Market effects on corporate investment are well documented. Low disagreement implies high investment, but we know little about what high disagreement implies, other than the implied flip side (low investment). This paper adds to this literature in several ways. A new dimension of corporate behavior that is related to disagreement is documented. Higher disagreement precedes a lower cost structure. Empirical tests reveal that the results are not driven by forced production efficiency due to financial constraints.

Suggested Citation

  • Smith, Jason, 2014. "Does the market matter for more than investment?," Journal of Empirical Finance, Elsevier, vol. 25(C), pages 52-61.
    • Handle: RePEc:eee:empfin:v:25:y:2014:i:c:p:52-61
    DOI: 10.1016/j.jempfin.2013.11.005
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    Cited by:

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    3. José Manuel Mansilla-Fernández & Juliette Milgram-Baleix, 2023. "Working capital management, financial constraints and exports: evidence from European and US manufacturers," Empirical Economics, Springer, vol. 64(4), pages 1769-1810, April.

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    More about this item

    Keywords

    Corporate finance; Divergent beliefs; Production efficiency;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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