Time: 9 Sep (Thursday), 15:30-17:00

Speaker: Min Dai, National University of Singapore

Join Zoom Meeting：

https://nus-sg.zoom.us/j/84419249997?pwd=UVNjTXpYcmwycHdIVGpnNWtkWmtUZz09

Meeting ID: 844 1924 9997

Passcode: 108687

Abstract: We propose a tractable model of dynamic investment, division sales (spinoffs), financing, and risk management for a multi-division firm facing costly external finance. Our main results are: (1) within-firm resource allocation is based not only on the divisions’ productivity—as in standard “winner picking” models—but also their risk; (2) firms may choose to voluntarily spin off productive divisions to increase liquidity; (3) diversification can reduce firm value in low liquidity states, as it hampers liquidity management; (4) corporate socialism makes liquidity less valuable; (5) division investment is determined by the ratio between marginal q and marginal value of cash. This work is jointly with Xavier Giroud, Wei Jiang, and Neng Wang.