Subsidiary uncertainty shocks and their effect on parent companies
Master thesis,
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http://hdl.handle.net/11250/2621970Utgivelsesdato
2019Metadata
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- Master of Science [1117]
Sammendrag
We investigate the impact of subsidiary cross-sectional uncertainty shocks
on the future investment decisions of multinational European Global
Ultimate Owners during the period 2007 to 2017. We expand on the
academic literature by utilizing a novel data set with global coverage
and annual ownership links and analyzing publicly-listed, as well as
private and smaller companies. We nd that Global Ultimate Owners
decrease their future investment decisions in response to uncertainty shocks
from their subsidiaries. We nd that two standard deviations generate
a 0.41% reduction in the investment rate of parent companies. More
importantly, we explore the multiplying e ect of nancial constraints in
parent companies investment decisions and nd that parent-level nancial
constraints multiply the e ect of lagged uncertainty shocks on investment
rate by 4.82 times on average. Furthermore, we document that lagged
uncertainty shocks also generate a decrease in intangible xed assets and
cash flows.
Beskrivelse
Masteroppgave(MSc) in Master of Science in Business, Finance - Handelshøyskolen BI, 2019