Capital and Labor Reallocation within Firms
Name
Giroud_Capital and.pdf
Size
398.65 KB
Format
Adobe PDF
Checksum (MD5)
ee0879ebfdd3f1bc433160a4e036a200
Author(s)
Giroud, Xavier
Mueller, Holger M.
Date Issued
July 2015
Journal
The Journal of Finance
Publisher
American Finance Association/Wiley
Citation
Giroud, Xavier, and Holger M. Mueller. “Capital and Labor Reallocation Within Firms.” The Journal of Finance 70, no. 4 (July 23, 2015): 1767–1804.
Version
Original manuscript
Abstract
We document how a positive shock to investment opportunities at one plant (“treated plant”) spills over to other plants within the same firm, but only if the firm is financially constrained. To provide the treated plant with resources, the firm's headquarters withdraws capital and labor from other plants, especially plants that are relatively less productive, not part of the firm's core industries, and located far away from headquarters. As a result of the resource reallocation, aggregate firm-wide productivity increases. We do not find evidence of capital or labor spillovers among plants of financially unconstrained firms.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1111/jofi.12254
