Why do diversified firms hold significantly less cash than focused firms? We study this using a dynamic model of corporate investment, saving, and diversification decisions. We find that investment dynamics are more important in explaining the cash differences than financing frictions. More...

Collaborative partnerships create interfirm linkages that potentially tie the fortunes of partnering firms to changing circumstances and decisions of each other. Yet not much is known about how firms in such partnerships are affected by their partners' post-formation decisions outside of...

Why do firms purchase technology instead of developing it internally? This paper studies two main motives behind technology-driven acquisitions: synergies and competition. We argue that the key determinant for the firm's choice of organic growth or acquisition of innovation is its profit shock...