We study how the creation of an internal capital market (ICM) can invite strategic responses in product markets that, in turn, shape firm boundaries. ICMs provide ex post resource flexibility, but come with ex ante commitment costs. Alternatively, stand-alones possess commitment ability but lack...

The impact of strategic alliances on futurecompetitive incentives can motivate interfirm equity sales. Many alliances arepartnerships between a small entrepreneurial firm and an established, largerpartner, in which the smaller firm sells an equity stake to its largerpartner. The paper develops a...

Optimal risk sharing in financial markets requires investors with high risk-bearing capacity to hold relatively large stakes. But holding large stakes might incentivize such investors to expend resources in monitoring the firm, a public good. Does this dissuade them from acquiring large stakes?...