Publications
Publications
- 2011
Do Public and Private Firms Behave Differently? An Examination of Investment in the Chemical Industry
By: Albert W. Sheen
Abstract
I compare the capacity expansion decisions of U.S. public and private producers of seven commodity chemicals from 1989-2006. I find that private firms invest differently, and more efficiently, than public firms. Specifically, private firms are more likely than public firms to increase capacity prior to a positive demand shock (an increase in price and quantity) and less likely to increase capacity before a negative demand shock. This result is particularly strong among private equity run firms. These findings are consistent with theories in which public firms are subject to greater agency concerns.
Keywords
Citation
Sheen, Albert W. "Do Public and Private Firms Behave Differently? An Examination of Investment in the Chemical Industry." July 2011.