Internal Capital Market and Dividend Policies: Evidence From Business Groups

• 成果类型: Article
• 署名作者: Gopalan, Radhakrishnan; Nanda, Vikram; Seru, Amit
• 署名单位: Washington University (WUSTL); University System of Georgia; Georgia Institute of Technology; University of Chicago; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhu004
• 发表日期: 2014
• 页码: 1102
• 关键词: FIRM BOUNDARIES MATTER; corporate diversification; inefficient investment; PYRAMIDAL OWNERSHIP; dark side; WORLD; finance; COSTS; LAW

摘要

We argue that internal capital market imperatives of business groups i.e., reallocation of capital across group firms, influences an affiliated firms dividend policy. Intuition is developed in a model in which business group insiders distribute dividends from cash-rich firms and use their share of payout to invest in other affiliated firms. Employing multi-country panel-data, we find support for this channel: Dividends by a group firm are positively related with equity-financed investments by its affiliated firms. Results are corroborated by exploiting variation in a firms investment opportunity generated by changes in import tariff policy: a shock to investment opportunity of an affiliated firm is propagated to dividend policies of other firms in its group.