Business groups, financing constraints and investment: the case of India
AbstractWe examine the effect of business group affiliation on corporate investment behaviour in India. More specifically, we test whether group affiliation reduces financing constraints for the affiliated firms. We use a data set containing 694 listed Indian companies for the 1989-97 period. We estimate a simple investment equation and find evidence that the investment-cash flow sensitivity is much lower for group affiliates. This suggests that business group affiliates have better access to external funds than stand-alone firms.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Journal of Development Studies.
Volume (Year): 40 (2003)
Issue (Month): 2 ()
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Other versions of this item:
- Gangopadhyay, Shubashis & Lensink, Robert & Molen, Remco van der, 2002. "Business groups, financing constraints, and investment : the case of India," Research Report 02E02, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Gangopadhyay, Shubashis & Lensink, Robert & Molen, Remco van der, 2001. "Business groups, financing constraints, and investment: the case of India," CCSO Working Papers 200116, University of Groningen, CCSO Centre for Economic Research.
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- Gopalan, Radhakrishnan & Nanda, Vikram & Seru, Amit, 2007. "Affiliated firms and financial support: Evidence from Indian business groups," Journal of Financial Economics, Elsevier, vol. 86(3), pages 759-795, December.
- Zia, Bilal H., 2008. "Export incentives, financial constraints, and the (mis)allocation of credit: Micro-level evidence from subsidized export loans," Journal of Financial Economics, Elsevier, vol. 87(2), pages 498-527, February.
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- Ghosh, Saibal, 2010.
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- George, Rejie & Kabir, Rezaul & Qian, Jing, 2011. "Investment-cash flow sensitivity and financing constraints: New evidence from Indian business group firms," Journal of Multinational Financial Management, Elsevier, vol. 21(2), pages 69-88, April.
- Audretsch, David B. & Weigand, Jurgen, 2005. "Do knowledge conditions make a difference?: Investment, finance and ownership in German industries," Research Policy, Elsevier, vol. 34(5), pages 595-613, June.
- Chinmay Pattnaik & James Chang & Hyun Shin, 2013. "Business groups and corporate transparency in emerging markets: Empirical evidence from India," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 987-1004, December.
- Rashid Ameer, 2013. "Financial liberalization and firms’ capital structure adjustments evidence from Southeast Asia and South America," Journal of Economics and Finance, Springer, vol. 37(1), pages 1-32, January.
- Gautam, Vikash, 2011. "Evidence on the dynamics of investment-cash flow sensitivity," MPRA Paper 35431, University Library of Munich, Germany, revised Dec 2011.
- Sumit Majumdar & Kunal Sen, 2007. "The debt wish: Rent seeking by business groups and the structure of corporate borrowing in India," Public Choice, Springer, vol. 130(1), pages 209-223, January.
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