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The oak and the reed: Working capital management and the role of business group affiliation

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  • Vivien Lefebvre
  • Anaïs Hamelin

Abstract

This study explores the role of business group affiliation in the working capital management of affiliated firms using a large sample of privately held firms in continental Europe. We show that small firms, but not medium-sized or large firms, affiliated with a business group have more operating working capital. This result is consistent with the hypothesis that affiliation with a business group relaxes financing constraints for affiliates? investment in working capital. Additional results reveal a common financial management of working capital at the group level.

Suggested Citation

  • Vivien Lefebvre & Anaïs Hamelin, 2022. "The oak and the reed: Working capital management and the role of business group affiliation," Finance, Presses universitaires de Grenoble, vol. 43(2), pages 159-194.
    • Handle: RePEc:cai:finpug:fina_432_0159
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