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Business groups, financing constraints, and investment: the case of India

Author

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  • Gangopadhyay, Shubashis
  • Lensink, Robert
  • Molen, Remco van der

    (Groningen University)

Abstract

We examine the effect of business group affiliation on corporate investment behavior in India. We use a data set containing 684 Indian listed companies for the 1989-1997 period. We estimate a simple investment equation and find evidence that cash flow has a positive effect on investment spending of stand-alone firms, whereas for group affiliates cash flow is either insignificant or has a much lower coefficient. This suggests that business group affiliates have better access to external funds than stand-alone firms.

Suggested Citation

  • 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.
    • Handle: RePEc:gro:rugccs:200116
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    File URL: http://irs.ub.rug.nl/ppn/241247209
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    Cited by:

    1. Bandyopadhyay, Arindam & Barua, Nandita Malini, 2016. "Factors determining capital structure and corporate performance in India: Studying the business cycle effects," The Quarterly Review of Economics and Finance, Elsevier, vol. 61(C), pages 160-172.

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