Board of Governors of the Federal Reserve System (U.S.)
Finance and Economics Discussion Series
The Long and Short of It : Do Public and Private Firms Invest Differently?
Using data from U.S. corporate tax returns, which provide a sample representative of the universe of U.S. corporations, we investigate the differential investment propensities of public and private firms. Re-weighting the data to generate observationally comparable sets of public and private firms, we find robust evidence that public firms invest more overall, particularly in R&D. Exploiting within-firm variation in public status, we find that firms dedicate more of their investment to R&D following IPO, and reduce these investments upon going private. Our findings suggest that public stock markets facilitate greater investment, on average, particularly in risky, uncollateralized investments.
Cite this item
Naomi E. Feldman & Laura Kawano & Elena Patel & Nirupama Rao & Michael Stevens & Jesse Edgerton, The Long and Short of It : Do Public and Private Firms Invest Differently?, Board of Governors of the Federal Reserve System (U.S.), Finance and Economics Discussion Series 2018-068, 28 Sep 2018.
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
Keywords: Corporate governance ; Investment ; Public firms
This item with handle RePEc:fip:fedgfe:2018-68
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