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Financial Markets And The Allocation Of Capital

  • Jeffrey Wurgler

Financial markets appear to improve the allocation of capital--across 65 countries, those with developed financial markets increase investment more in growing industries, and decrease investment more in declining industries, than financially undeveloped countries. The efficiency of capital allocation is also negatively correlated with the extent of state ownership in the economy, and positively correlated with the degree of firm-specific movement

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Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm123.

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Date of creation: 01 Aug 1999
Date of revision: 01 Mar 2001
Handle: RePEc:ysm:somwrk:ysm123
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  20. Asli Demirgüç-Kunt & Vojislav Maksimovic, 1998. "Law, Finance, and Firm Growth," Journal of Finance, American Finance Association, vol. 53(6), pages 2107-2137, December.
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  26. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
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