Efficiency of Internal Capital Markets: Evidence from Tracking Stocks

Abstract

This thesis examines the changes in the investment behavior of parent companies that issue tracking stocks as a financial engineering instrument. Several authors and researchers have different perspectives on the performance and efficiency of this instrument. This thesis studies the efficiency of internal capital market, taking evidence from the performance of tracking stocks. Subsequently, the real question of this thesis is whether the sensitivity of investment in parent companies changes before and after the issue of tracking stocks.

In the analyses performed, I obtained results consistent with the view that the sensitivity of investment increases after the tracking stock issue. However, the results are not conclusive and not statistically significant. I conclude that the results represent at best weak evidence that investment in the parent company becomes more sensitive to investment opportunity after the tracking stock issue.

Notes

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Thesis Completion

2003

Semester

Fall

Advisor

Choi, Yoon K.

Degree

Bachelor of Science (B.S.)

College

College of Arts and Sciences

Degree Program

Finance

Subjects

Business Administration -- Dissertations, Academic; Dissertations, Academic -- Business Administration

Format

Print

Identifier

DP0021759

Language

English

Access Status

Open Access

Length of Campus-only Access

None

Document Type

Honors in the Major Thesis

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