DO GROUP AFFILIATED AND UNAFFILIATED FIRMS HOLD CASH DIFFERENTLY? THE CASE OF PAKISTAN

Ishtiaq Ahmad ()
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Ishtiaq Ahmad: University of Debrecen, Hungary

Annals of Faculty of Economics, 2017, vol. 1, issue 1, 373-384

Abstract: This study analyses the effect of business group membership on cash holding pattern of affiliated firms listed at Pakistan Stock Exchange from 2009-2014. Group affiliation can increase benefits for affiliated firms by providing an access to internal capital markets, particularly in emerging economies where institutional control is weak and access to external financing is difficult and expensive. Using panel data of public limited group affiliated firms and comparable standalone firms, the empirical results show that group firms hold less cash than standalone firms. The results are in line with the view that access to internal capital markets enables group affiliated firms to manage their operations with low cash reserves.

Keywords: Group affiliation; cash holdings; affiliated firms (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2017:i:1:p:373-384

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