Global Review of Accounting and Finance
Vol. 8. No. 2., September 2017, Pages: 39 – 50
The Role of Organizational Form in Project Choice: Evidence from the Movie Industry
This paper examines the role of organization form on the real investment decisions of a firm. Using detailed project-level data on hundreds of projects, this paper investigates risk and returns of projects in the movie industry characterized by two distinct and separate organization forms: one by firms that cater to the needs of consumers in small specialized niches and the other by firms that cater to the mass market. The findings are consistent with theories in which firms with organization forms plagued by agency problems engage in distorted investment behavior.