Conglomerate Entrenchment under Optimal Financial Contracting
用金融合约模型分析企业集团为何更“固守”，发现现金流池化和更优信贷条件会强化这一效应，但对低利润业务，内部资本市场可能反向增加退出风险。
We provide a formal analysis of the notion that conglomerates are more ‘entrenched’ as they have ‘deeper pockets’. Using the financial contracting model of Bolton and Scharfstein (1990), we can isolate two effects that confirm this conjecture: the pooling of cash flows, which allows to smooth out repayments, and the ability to obtain better credit terms. For less profitable business segments, the internal capital market operated in a conglomerate may, however, work in the opposite direction, increasing the sensitivity of operations to own cash flows and increasing the likelihood of exit.