Internal capital market subsidies and industry downturns

Charles A. Brown, Chris R. McNeil

Research output: Contribution to journalArticlepeer-review


We examine whether multisegment firms tend to subsidize operations doing business in industries that experience a major downturn in investment opportunities. The results provide little evidence of subsidization. The likelihood of discontinuation of multisegment operations in these industries does not statistically differ from that of single-segment operations. Similarly, patterns of capital expenditures after the shock do not materially deviate between multisegment and single-segment operations. These results indicate that the internal capital markets of multisegment firms are no less (and no more) efficient than that of single-segment firms in their reaction to a shock to investment opportunities.

Original languageEnglish (US)
Pages (from-to)337-361
Number of pages25
JournalAccounting and Finance
Issue number3
StatePublished - Sep 1 2008

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics, Econometrics and Finance (miscellaneous)


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