• DOI:10.1111/JOFI.12003
Corpus ID: 548263

Divisional Managers and Internal Capital Markets

@article{Duchin2013DivisionalMA,
  title={Divisional Managers and Internal Capital Markets},
  author={R. Duchin and D. Sosyura},
  journal={Journal of Finance},
  year={2013},
  volume={68},
  pages={387-429}
}

R. Duchin, D. Sosyura

Published 2013

Business

Journal of Finance

Using hand-collected data on divisional managers at S&P 500 firms, we study their role in internal capital budgeting. Divisional managers with social connections to the CEO receive more capital. Connections to the CEO outweigh measures of managers’ formal influence, such as seniority and board membership, and affect both managerial appointments and capital allocations. The effect of connections on investment efficiency depends on the tradeoff between agency and information asymmetry. Under weak… CONTINUE READING

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