Modigliani and Miller Meet Chandler: Organizational Complexity and Capital Structure
We study how the degree of organizational complexity of a firm relates to its corporate financial policies. We measure complexity as the number of layers in the firm’s subsidiary structure, and focus on a sample of US firms over the period 1996-2006. We argue that organizational complexity makes the firm opaque and increases the asymmetry of information between it and the market. We show that … [ Read more ]
Content: Article | Authors: Alberto Manconi, Massimo Massa | Source: Social Science Research Network (SSRN) | Subjects: Finance, Organizational Behavior