The oak and the reed: Working capital management and the role of business group affiliation

Vivien Lefebvre and Anaïs Hamelin

Finance, 2022, vol. 43, issue 2, 159-194

Abstract: This study explores the role of business group affiliation in the working capital management of affiliated firms using a large sample of privately held firms in continental Europe. We show that small firms, but not medium-sized or large firms, affiliated with a business group have more operating working capital. This result is consistent with the hypothesis that affiliation with a business group relaxes financing constraints for affiliates? investment in working capital. Additional results reveal a common financial management of working capital at the group level.

Keywords: working capital management; business groups; privately held firms; size (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:cai:finpug:fina_432_0159

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