Corporate Governance, Investment Bandwagons and Over Capacity : An Analysis of The Worldwide Petrochemical Industry, 1975 - 98  

Oleh:

Henderson, James ; Cool, Karel

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Strategic Management Journal vol. 24 no. 4 (2003), page 349-374.
Topik: investment; corporate governance; capacity expansion; over investment

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: SS30.11 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

Lihat Detail Induk

Isi artikel

Previous research has provided conflicting arguments and evidence on which corporate governance system bank based or market based is better in preventing managers form investing in value destroying projects. This paper attempts to further the debate by comparing the effect of these different corporate governance systems on preventing capacity expansion bandwagon behaviour in the worldwide petrochemical industry in the period 1975 - 95. Our study shows, first, that neither system is particularly effective in curbing over investment : however, the market - based system seems to be less ineffective than the bank - based system. Second, free cash flow appears to drive greater bandwagon behaviour in the market - based system than in the bank -based system. Finally, within the bank - based system, companies that rely on one bank - shareholder are more likely to join the bandwagon than those with more than one.

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