The role of parent firms in business groups’ internal capital markets

Heejung Choi and Jungwon Suh

Journal of Business Finance & Accounting, 2023, vol. 50, issue 3-4, 820-857

Abstract: Using a unique dataset of unconsolidated financial statements, we investigate the investment and financing policies of parent firms in South Korea's business groups over the period 2003–2016. Parent firms add to their equity‐stake holdings substantially each year to support affiliated firms’ capital expenditures. Parent firms finance their equity‐stake investment primarily with external funds. These tendencies are more pronounced if parents sit high in the pyramidal chain or are central to controlling other group firms and if parents belong to large business groups. Overall, parent firms prioritize their role as capital raisers and distributors for affiliated firms, and business groups’ internal capital markets are supported by external finance.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jbfa.12639

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:bla:jbfnac:v:50:y:2023:i:3-4:p:820-857

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0306-686X

Access Statistics for this article

Journal of Business Finance & Accounting is currently edited by P. F. Pope, A. W. Stark and M. Walker

More articles in Journal of Business Finance & Accounting from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().