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Is group affiliation profitable in developed countries? Not in Belgium


  • DELOOF, Marc
  • JEGERS, Marc


Several studies find that business groups create value for affiliated companies in developing countries, which are characterized by weak institutions and poorly functioning markets. In these countries, business groups can act as an intermediary between imperfect markets and individual entrepreneurs. This raises the question whether business groups also create value in countries with strong institutions and well-functioning markets, as there are also substantial costs associated with business groups. We investigate the performance of group-affiliated companies in Belgium, and find that these companies significantly underperform compared to stand-alone companies. Moreover, our results suggest that internal capital markets in Belgian business groups result in misallocation of capital.

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  • BUYSSCHAERT, An & DELOOF, Marc & JEGERS, Marc, 2005. "Is group affiliation profitable in developed countries? Not in Belgium," Working Papers 2005014, University of Antwerp, Faculty of Applied Economics.
  • Handle: RePEc:ant:wpaper:2005014

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    Cited by:

    1. BEUSELINCK, Christof & DELOOF, Marc, "undated". "Bussiness groups, taxes and accruals management," Working Papers 2006015, University of Antwerp, Faculty of Applied Economics.
    2. Beuselinck, C.A.C. & Deloof, M., 2006. "Business Groups, Taxes and Accruals Management," Discussion Paper 2006-46, Tilburg University, Center for Economic Research.

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    Business groups; Company performance; Developed countries; Internal capital markets;

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