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Empire-Building or Bridge-Building? Evidence from New CEOs' Internal Capital Allocation Decisions
The Review of financial studies
This article investigates how the job histories of CEOs influence their capital allocation decisions when they preside over multidivisional firms. I find that, after CEO turnover, divisions not previously affiliated with the new CEO receive significantly more capital expenditures than divisions through which the new CEO has advanced. The pattern of reverse-favoritism in capital allocation is more pronounced if the new CEO has less authority or if the unaffiliated divisions have more bargainingdoi:10.1093/rfs/hhp030 fatcat:7ixttqgkrvak3jof75x65gbxhe