Inefficiencies in the internal capital allocation process---Antecedents and performance implications.

摘要

In this dissertation, I examine the internal allocation of investment capital across business segments within the firm. Introducing a multilevel model that relies more on narrower and less distant measures of firm performance, I predict that a number of multilevel antecedents including performance aspirations, corporate governance variables, and environmental uncertainty affect the efficiency of the internal capital allocation process which, in turn, affects three important firm performance outcomes---the diversification discount, the corporate effect and firm ROA. Results suggest a pervasive effect of performance aspirations on the efficiency of the allocation process as well as a mainly positive effect of allocation efficiency on performance outcomes. Thus, by combining four distinct literatures on capital allocation, firm performance decomposition, diversification, and the diversification discount into a more integrated framework for looking at the efficiency of the capital allocation process, this dissertation should be viewed as an initial step in building knowledge about both antecedents to allocation efficiency as well as performance implications of allocation efficiency within the boundaries of the firm.