Cecilia Bustamante Directory Page
Cecilia Bustamante
Associate Professor
PhD in Finance, Swiss Finance Institute, University of Lausanne
Dr. M. Cecilia Bustamante is an asociate professor of finance at the Robert H. Smith School of Business at the University of Maryland.
Her research interests include applied dynamic corporate finance, industrial organization, and the asset pricing implications of corporate decisions. Her recent work elaborates on how competitive pressures in product markets affect corporate investment decisions and firms’ exposure to systematic risk. Cecilia has also studied the underlying determinants of waves in public equity offerings, and is currently analyzing how to reward CEOs optimally depending on the investment opportunities that firms may have.
Cecilia received her PhD in Finance from the Swiss Finance Institute at the University of Lausanne, and was a Visiting Scholar at the Haas School of Business at UC Berkeley during her PhD studies. Before pursuing an academic career, Cecilia also worked as a consultant in forensic finance supporting multinational firms in international arbitration procedures.
News
Professor M. Cecilia Bustamante at the University of Maryland’s Robert H. Smith School of Business was an invited speaker at the first…
SMITH BRAIN TRUST — People who study financial economics regularly assume that the markets in which firms sell their products are…
Research
Insights
In Press, 2017
Bustamante MC, Donangelo A. Industry Concentration and Markup: Implications for Asset Pricing. Review of Financial Studies. In Press, 2017.
2017
Anderson R, Bustamante MC, Guibaud S, Zervos M. Agency, firm growth and managerial turnover. Journal of Finance. 2017.
2016
Bustamante MC. How do frictions affect corporate investment? A structural approach. Journal of Financial and Quantitative Analysis [Internet]. 2016;51 (6) :1-34.
2015
Bustamante MC. Strategic investment and industry risk dynamics. Review of Financial Studies [Internet]. 2015;28 :297-341.
2012
Bustamante MC. The Dynamics of Going Public. Review of Finance [Internet]. 2012;16 :577-618.
Academic Publications
Dynamic Investment and Product Market Rivalry: The Network Q Model
February 2026
We present a new dynamic model of corporate investment in imperfectly-competitive product markets, extending the neoclassical (Q) theory of investment to a multi-firm, multi-product, fully structural model. The model provides an explicit formula to quantify corporate investment and characterize investment spillovers for the entire network of firms in any economy. The model therefore provides a tool for future for researchers and policymakers alike, to understand relevant issues such as the way in which a specific merger affects all interconnected firms in the same network and consumer welfare, or how changes in aggregate discount rates affect markups and product market concentration both over time and in the cross section of firms.
In the paper, we take our model to the data for the universe of U.S. publicly traded companies and obtain five novel insights: 1) product market competition is a key force driving aggregate investment and capital allocation; 2) the persistence of firm's capital stocks increased over the past 25 years (i.e. capital has became ""stickier""); 3) monopoly rents account for a large, rising share of firms' value; 4) positive shocks to firms' cost of capital increase markups and concentration; 5) mergers consummated since 1995 have led to a modest decline in aggregate capital formation. These findings contribute to the existing economics and finance literature analyzing the secular decline in product market competition in the US, and the impact of product markets on firms' valuations
Maria Cecilia Bustamante (UMD) and Bruno Pellegrino (Columbia)