Advanced Search
MyIDEAS: Login

Financially Interlinked Business Groups

Contents:

Author Info

  • Maitreesh Ghatak
  • Raja Kali

Abstract

Financial interlinkage, in the form of cross-holding of equity and debt between firms, characterizes business groups in many countries. We suggest that such financial interlinkage can be viewed as a way to solve credit rationing caused by asymmetric information. If firms possess better information about each other than a bank, then business groups can be a mechanism to induce firms to sort on the basis of this information. Banks can offer a menu of contracts that vary in the extent of financial interlinkage to induce firms to self-select on the basis of the equilibrium composition of the business groups they can form. Copyright (c) 2001 Massachusetts Institute of Technology.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.blackwell-synergy.com/servlet/useragent?func=synergy&synergyAction=showTOC&journalCode=jems&volume=10&issue=4&year=2001&part=null
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 10 (2001)
Issue (Month): 4 (December)
Pages: 591-619

as in new window
Handle: RePEc:bla:jemstr:v:10:y:2001:i:4:p:591-619

Contact details of provider:
Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

Order Information:
Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. de Meza, David & Webb, David C, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 281-92, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Macchiavello, Rocco, 2010. "Vertical integration and investor protection in developing countries," Journal of Development Economics, Elsevier, vol. 93(2), pages 162-172, November.
  2. Feenstra, Robert C. & Huang, Deng-Shing & Hamilton, Gary G., 2003. "A market-power based model of business groups," Journal of Economic Behavior & Organization, Elsevier, vol. 51(4), pages 459-485, August.
  3. Gonenc, Halit & Hermes, Niels, 2008. "Propping: Evidence from new share issues of Turkish business group firms," Journal of Multinational Financial Management, Elsevier, vol. 18(3), pages 261-275, July.
  4. Christa Hainz, 2006. "Business Groups in Emerging Markets-Financial Control & Sequential Investment," William Davidson Institute Working Papers Series wp830, William Davidson Institute at the University of Michigan.
  5. Dewaelheyns, Nico & Van Hulle, Cynthia, 2010. "Capital structure dynamics in private business groups," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/387728, Katholieke Universiteit Leuven.
  6. Dewaelheyns, Nico & Locorotondo, Rosy & Van Hulle, Cynthia, 2011. "Cash holdings within subsidiaries: impact of group health," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/388047, Katholieke Universiteit Leuven.
  7. Dewaelheyns, Nico & Locorotondo, Rosy & Van Hulle, Cynthia, 2010. "The determinants of cash holdings within business groups," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/388011, Katholieke Universiteit Leuven.
  8. Christa Hainz, 2006. "Business Groups in Emerging Markets – Financial Control and Sequential Investment," CESifo Working Paper Series 1763, CESifo Group Munich.
  9. Dewaelheyns, Nico & Locorotondo, Rosy & Van Hulle, Cynthia, 2010. "Cash holdings within subsidiaries: impact of group health," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/387990, Katholieke Universiteit Leuven.
  10. Atif Ikram & Syed Ali Asjad Naqvi, 2005. "Family Business Groups and Tunneling Framework : Application and Evidence from Pakistan," Microeconomics Working Papers 22263, East Asian Bureau of Economic Research.
  11. Dewaelheyns, Nico & Van Hulle, Cynthia, 2009. "Capital structure dynamics in private business groups," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/385978, Katholieke Universiteit Leuven.
  12. Giovanni BUSETTA & Alberto ZAZZARO, 2006. "Mutual Loan-Guarantee Societies in Credit Markets with Adverse Selection: Do They Act as a Sorting Device?," Working Papers 273, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  13. Rocco Macchiavello, 2007. "Vertical Integration, Missing Middle and Investor Protection in Developing Countries," Economics Series Working Papers 373, University of Oxford, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:10:y:2001:i:4:p:591-619

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.