Capital and Labor Reallocation within Firms

  title={Capital and Labor Reallocation within Firms},
  author={Xavier Giroud and H. Mueller},
  journal={Corporate Governance & Finance eJournal},
  • Xavier Giroud, H. Mueller
  • Published 2014
  • Economics, Business
  • Corporate Governance & Finance eJournal
  • We document how a 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, headquarters withdraws capital and labor from other plants, especially from 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… CONTINUE READING
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