CAFIN Lecture: The Rise of Star Firms: Intangible Capital and Competition
There is a divergence in the returns of top-performing ﬁrms and the rest of the economy, especially in industries that rely on a skilled labor force, raising concerns of their market power. We show that the divergence is explained by the mismeasurement of intangible capital. In fact, star ﬁrms produce more per dollar of invested capital, have higher growth, innovation, and productivity and are not diﬀerentially aﬀected by exogenous competitive shocks than other ﬁrms. Their pricing power supports its high intangible capital investment. Some exceptional ﬁrms may pose concerns due to their potential to foreclose competition in the future.
Vojislav "Max" Maksimovic is the William A. Longbrake Chair in Finance & Professor of Finance at the Robert H. Smith School of Business, University of Maryland. His recent research focuses on how a firm's organizational structure affects the flow of resources across its divisions. He has also worked on how competition in high technology industries determines the timing of initial public offerings. Maksimovic is interested in international finance, specifically in how a country's legal and institutional environment influences the financing and investment by firms. Maksimovic's research has been published in the Journal of Finance, Review of Financial Studies, Rand Journal of Economics, Journal of Financial Economics, and Journal of Financial and Quantitative Analysis. He is an associate editor of the Journal of Financial Intermediation and a past member of the board of directors of the Western Finance Association.
Thursday, November 7, 2019 at 12:00pm
Engineering 2, 499
Engineering 2 1156 High Street, Santa Cruz, California 95064