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Business Group Affiliation and Investment Efficiency: International Evidence

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  • Siwen Fu
  • Jeong‐Bon Kim

Abstract

We examine the effect of business group affiliation on firm‐level investment efficiency using an international sample. Prior research has investigated both the benefits and drawbacks of this form of ownership structure. We first document that group affiliates are more efficient in their investment decisions than standalones by constraining both over‐investment and under‐investment. Moreover, this internal capital allocation matters more in countries with high external financing restrictions and less developed capital markets. Analysis at the business group level reveals that this relation is more pronounced for member firms in a pyramidal structure group and located in the lower layer.

Suggested Citation

  • Siwen Fu & Jeong‐Bon Kim, 2025. "Business Group Affiliation and Investment Efficiency: International Evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(3), pages 3004-3023, September.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:3:p:3004-3023
    DOI: 10.1111/acfi.70028
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    References listed on IDEAS

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