Ownership Structure And Inventory Policy
AbstractThis paper explores the effect of a firm’s ownership structure on its inventory policy. We have argued that the presence of institutional investors like banks as blockholders, reduces a firm’s liquidity needs and prevents overinvestment policies. This, in turn, leads to lower inventory levels, especially for small and/or diversified firms. Also, we expect less inventory investment when bank equity financing is compared with bank debt financing. Finally, other components of ownership structure like the number of blockholders prevent overinvestment that may generate excessive inventory accumulation. We have proved these theoretical contentions making use of a database of Spanish manufacturing firms.
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Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Economía de la Empresa in its series Business Economics Working Papers with number wb043211.
Date of creation: Aug 2004
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