We 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.
CITATION STYLE
Lensink, R., Van der Molen, R., & Gangopadhyay, S. (2003). Business groups, financing constraints and investment: The case of India. Journal of Development Studies, 40(2), 93–119. https://doi.org/10.1080/00220380412331293787
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