آیا بازار از سرمایه گذاری مهم تر است؟
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|13564||2014||10 صفحه PDF||سفارش دهید||6560 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Empirical Finance, Volume 25, January 2014, Pages 52–61
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.
Traditional finance theory argues that corporations make decisions, and efficient markets adjust prices accordingly. Recent research takes a more contemporary view that managers also use the market for guidance in making corporate decisions. Morck et al. (1990), Baker et al. (2003), Polk and Sapienza (2009), and others consider how the market affects corporate investment. This paper addresses a related question: Does the market affect more than just corporate investment? In particular, is there an effect on production efficiency? This paper demonstrates that disagreement between the market and the manager can also influence firms to improve cost productivity. Since all firms should strive to lower costs and improve production efficiency, why would the market affect the costs of the firm? The key is that the manager and the market may disagree over the investment opportunities and challenges the firm will experience. In some instances, the manager will be concerned with the opinion of the market simply because the firm is financially constrained and cannot procure funding without agreement. Without financial constraints, a manager who cares about the current stock price will also care about the level of market disagreement. One such instance is when the manager has limited amounts of effort and must choose between new investment and production efficiency. The disagreement would cause the stock price to drop if the manager chooses investment which rationally could lead the manager to choose to improve production efficiency. Frequently the firm is faced with a decision to improve an existing product or create a newer version. With market agreement on investment of any kind for the firm, the manager will create the new product. Disagreement can lead the manager to improve the cost structure while reducing new investment. Finally, the manager may not have any positive net present value projects when there is large disagreement, but there are still plenty of opportunities to improve production efficiency. Whether or not the market will concur with investment is central. Why would the market disagree with the manager's investment choices? One possible reason is that the manager and the investors have asymmetric information. However, with sufficient communication, both rational agents will agree on the investment decision leaving no reason for the stock price to decrease prior to the decision. Even if asymmetric information does drive some of the divergence between the manager and investors, Dittmar and Thakor (2007) find that agreement between investors and the manager provides incremental explanatory power over asymmetric information in a firm's issuance decision. Agency problems could also lead to the manager's sub-optimal investment and high disagreement, but agency issues should keep disagreement high and need not give rise to negative covariance between disagreement and corporate decisions. Funding should be more difficult to acquire when agency issues are present and attempts should be made to align the manager's and investors' incentives. Disagreement may arise from differing prior beliefs about the project payoff. This type of situation will tend to occur when the project is fairly new and there is a minimal amount of objective history to guide the formation of initial beliefs (prior distributions). Agreement is more likely if the project is familiar to both parties and there is less room for subjective formation of priors. Intuitively, if the market agrees with investing, then the manager will grow the firm by investing. If the market disagrees with investing, the manager will grow the firm by managing costs and operational efficiency. Identifying agreement is a challenge. The first measure of agreement is the dispersion of analysts' forecast earnings. Since analysts are presumably analyzing the same information, the more dispersed the forecasts, the more likely it is that the investors will disagree with the manager. The second and third measures are constructed following Chen et al. (2002). The second measure is the change in the number of mutual funds holding the stock divided by the total number of mutual funds in existence that period. The third measure is the change in the percent of the total outstanding shares held by mutual funds. Mutual funds will sell the stock or hold less of it if the manager will invest in value destroying investments. Since the universe of mutual funds has grown tremendously, only funds that existed in both periods are included. Empirical results provide strong support for lower agreement followed by lower costs, investments, and higher cash flows. Since the focus of this paper is on the interaction between agreement and production efficiency, and the results on investment have already been established, the latter two are untabulated. Net equity and debt issues combined with many different measures of financial constraints, including measures developed by Hadlock and Pierce (2010), Whited and Wu (2006), Almeida et al. (2004), and Kaplan and Zingales (1997), which are used as controls to ensure explicit dependence on the external market do not force increased production efficiency improvement. The remainder of the paper is organized as follows: Section 2 summarizes the related literature and outlines the empirical predictions, Section 3 discusses the data, Section 4 provides the empirical results, Section 5 discusses robustness, and Section 6 concludes.
نتیجه گیری انگلیسی
This paper elucidates the interaction between investors and managers. The main finding is that disagreement induces improved cost productivity. The evidence supports the hypothesis that the manager of a corporation that is in agreement with investors prefers to grow the top line of the firm by taking on investment and choosing to worry less about costs. Without agreement, the manager must tighten the proverbial belt and serve his fiduciary duty by improving efficiency through cost cutting, that is, growing the bottom line. Some firms may experience improved production efficiency (reduced costs) simply because there are no funding opportunities available. Agreement still matters for firms when controlling for both equity and debt issuances. Since this will not capture the endogeneity inherent in the issuance decision, financial constraints must be considered. Agreement generally retains both economic and statistical significance after controlling for financial constraints using the SA Index, WW Index, KZ Index, and the Payout Ratio.