Business group finance company and member firms’ operational performance

Yongmei Tu, Jihong Liu and Degan Yu

Finance Research Letters, 2025, vol. 82, issue C

Abstract: This article explores how a business-group-affiliated finance company influences member firms’ operational efficiency, using a hand-collected dataset on Chinese business groups. We find that a member firm that receives services from its affiliated finance company achieves some improvement in its operational performance. Further evidence shows that this positive effect is attributed to the fact that a finance company can help reduce the internal information asymmetry of the business group. We identify ‘governance improvement’ channel, ‘expenditure saving’ channel and ‘stabilizing of operating environment’ channel that make this effect possible.

Keywords: Operational efficiency; Business group; Finance company; Internal capital market (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s1544612324017549

DOI: 10.1016/j.frl.2024.106725

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