The Effects of Losing a Business Group Affiliation

• 成果类型: Article
• 署名作者: Larrain, Borja; Sertsios, Giorgo; Urzua, Francisco, I
• 署名单位: Pontificia Universidad Catolica de Chile; Universidad de los Andes - Chile; Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhy120
• 发表日期: 2019
• 页码: 3036
• 关键词: internal capital-markets; PYRAMIDAL OWNERSHIP; dark side; diversification; INVESTMENT; FIRMS

摘要

We propose a novel identification strategy for estimating the effects of business group affiliation. We study two-firm business groups, some of which split up during the sample period, leaving some firms as stand-alone firms. We instrument for stand-alone status using shocks to the industry of the other group firm. We find that firms that become stand-alone reduce leverage and investment. Consistent with collateral cross-pledging, the effects are more pronounced when the other firm had high tangibility. Consistent with capital misallocation in groups, the reduction in leverage is stronger in firms that had low (high) profitability (leverage) relative to industry peers.