| Description |
1 online resource (44 pages) |
| Series |
IMF Working Paper ; WP/17/146 |
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IMF working paper ; WP/17/146.
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| Contents |
Cover; Table of Contents; 1 Introduction; 2 The Relationship between Extensive Margin Adjustment and Asset Price Under CCAPM; 3 Data Description; 4 Empirical Findings; 4.1 Extensive Margin Adjustment Rate is Sticky -- 4.2 Comparison between High vs Low Product Turnover Groups; 4.3 Portfolio Analysis; 4.4 Extensive margin Adjustment and Risk; 4.5 Robustness Check; 5 A Dynamic Model of Extensive Margin Adjustment; 5.1 Household; 5.2 Price of the Product; 5.3 Firm's Decision on Optimal Product Scope: Without Friction; 5.4 Firm's Decision on Optimal Product Scope: A Calvo-type Model |
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5.5 Model Summary5.6 Return Rate; 5.7 Parametrization; 5.8 Simulation; 6 Conclusion; References; Appendix |
| Summary |
Product scope adjustment is a key mechanism through which multi-product firms achieve efficient resource allocations. In this paper, we take a novel perspective to study firms' product scope adjustment behavior through the lens of asset pricing. Using a unique panel scanner data set containing detailed information on products, matched with the financial information of their manufacturers, we find that multi-product firms with higher product turnover have lower financial risks and lower risk premia. To understand this channel, we propose a stylized model with a time-dependent (Calvo-type) product turnover rate to highlight the 'risk absorption channel' of product scope adjustment. In response to an economy-wide shock, a firm that can adjust its product scope more flexibly shows lower excess equity returns and lower asset volatility |
| Notes |
Print version record |
| Subject |
Prices -- Econometric models
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Capital assets pricing model.
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Risk management.
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risk management.
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Risk management
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Prices -- Econometric models
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Capital assets pricing model
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Asset Pricing.
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Business Objectives Of The Firm.
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Firm Performance: Size, Diversification, And Scope.
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Size Distribution Of Firms.
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| Form |
Electronic book
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| ISBN |
1484303768 |
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9781484303764 |
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1484307046 |
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9781484307045 |
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