Internal Capital Market and Investment Decisions in Small and Medium-Sized Groups

Donato Iacobucci ()
Additional contact information
Donato Iacobucci: Università Politecnica delle Marche

A chapter in Small Businesses in the Aftermath of the Crisis, 2012, pp 211-227 from Springer

Abstract: Abstract The main hypothesis of this paper is that firms belonging to business groups are expected to be less financially constrained in their investment policies because they can rely on the transfer of resources from other affiliated companies. This is specifically relevant for small firms and in the presence of external real and financial shocks. The presence of an internal capital market in small and medium-sized groups is tested by comparing the cash flow-investment sensitivity between affiliated and non-affiliated companies. This hypothesis has already been empirically tested. However, up to now empirical studies have referred to large groups in emerging economies. Overall the results confirm the main hypothesis. To the extent that cash flow-investment sensitivity is interpreted as the presence of financial constraints, the results of the paper show that belonging to a business group reduces the financing constraints when raising funds to finance investment.

Keywords: Cash Flow; Business Group; Intangible Asset; Minority Shareholder; Financing Constraint (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-7908-2852-8_11

Ordering information: This item can be ordered from
http://www.springer.com/9783790828528

DOI: 10.1007/978-3-7908-2852-8_11

Access Statistics for this chapter

More chapters in Contributions to Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().