The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.
Internal versus External Capital Markets
Abstract
This paper presents a framework for analyzing the costs and benefits of internal versus external capital allocation. We focus primarily on comparing an internal capital market with bank lending. While both represent centralized forms of financing, in the former case the financing is owner-provided, while in the latter case it is not. We argue that the ownership aspect of internal capital allocation has three important consequences: (1) it leads to more monitoring than bank lending; (2) it reduces managers' entrepreneurial incentives; and (3) it makes it easier to efficiently redeploy the assets of projects that are performing poorly under existing management.
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Citations
Cites
Financial intermediation and delegated monitoring
Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476
Cited by
A Survey of Corporate Governance
Shleifer, A., & Vishny, R. W. (1997) · The Journal of Finance · doi:10.1111/j.1540-6261.1997.tb04820.x · Cited by 16,243
Who makes acquisitions? CEO overconfidence and the market's reaction☆
MALMENDIER, U., & TATE, G. (2008) · Journal of Financial Economics · doi:10.1016/j.jfineco.2007.07.002 · Cited by 2,754
Banking Globalization and Monetary Transmission
CETORELLI, N., & GOLDBERG, L. S. (2012) · The Journal of Finance · doi:10.1111/j.1540-6261.2012.01773.x · Cited by 774
Campello, M. (2002) · The Journal of Finance · doi:10.1111/1540-6261.00512 · Cited by 474
The Cost of Diversity: The Diversification Discount and Inefficient Investment
Rajan, R. G., Servaes, H., & Zingales, L. (1998) · SSRN Electronic Journal · doi:10.2139/ssrn.56108 · Cited by 409
Metadata
- Authors
- Gertner, R. H., Scharfstein, D. S., & Stein, J. C.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1994-11-01
- Volume
- 109
- Issue
- 4
- Pages
- 1211-1230
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2039077859
- Cited by
- 646
- References
- 1
- FWCI
- 32.93
- Type
- journal article
- Language
- en
- Open access
- closed
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- Gertner, R. H., Scharfstein, D. S., & Stein, J. C. (1994). Internal versus External Capital Markets. The Quarterly Journal of Economics. https://doi.org/10.2307/2118361
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
