Abstract
We evaluate how the change in the value captured by the focal firm, as a result of an exogenous shock in the price of its product, affects a firm’s total capital expenditure and its allocation to sustaining and expansion investments. Different behaviors in investment decisions (and the allocation of investments in sustaining and expansion activities) can affect firm heterogeneity, competition, and the value distributed to stakeholders. Using data from the main copper mines in the world, we show that the sensitivity of total investments to exogenous changes in the price of minerals is higher in privately-owned firms. Even more important, we found that the difference in investment behavior is driven by a lower sensitivity of investments in expansion activities in the case of state-owned companies. In contrast, investments in sustaining activities are not significantly different across ownership types.
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