Title: Learning from Other Firms' Investments: Corporate Governance and Firm Entry
Abstract: We propose that potential entrants learn about industry conditions from observing the investment behavior of established firms. Strong corporate governance at established firms facilitates learning spillovers. Empirically, we find that industries experience more entry if incumbent firms invest more. The sensitivity of entry to investment activity is much higher in industries with strong corporate governance. Moreover, consistent with the learning hypothesis, the effects are strongest for industries with less informative stock prices and when exposure to industry-level uncertainty is high.
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 6
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