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Business Group Affiliation and Resilience to COVID-19 Outbreak in India

Shreya Biswas and Nivedita Sinha

Chapter 21 in Financial Transformations Beyond the COVID-19 Health Crisis, 2022, pp 615-637 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The economic and market impact of COVID-19 in India has been quite disruptive, creating stress for Indian corporates. We observe the listed firms in India during the COVID-19 health crisis and the stringent lockdown period and investigate the performance of business group-firms as compared to a matched sample of standalone firms. We find that business group-firms outperformed the standalone firms during the nationwide lockdown as well as the extended lockdown period and attribute this short-term outperformance to the access to internal capital markets. Our results suggest that group-firms with better growth opportunities and affiliated to larger business groups had much higher returns, indicating an efficient transfer of resources amongst group-firms. Our results suggest that the presence of internal capital markets led to lower erosion of market value for shareholders.

Keywords: COVID19; Pandemic; Pandemic Outbreak; Health Crisis; Economics; Macroeconomics; Finance; Sustainable Finance; Financial Crisis; Financial Integration; Economic Integration; Global Financial Crisis; Financial Institutions; Corporate Finance; Corporate Governance; Board of Directors; ESG; Corporate Social Responsibility; Sustainable Finance; Stock Markets; Financial Markets; Stock Market Behaviour; Firm Liquidity; Emerging Markets; China; Financial Institutions; Money; Banks; Banking System; Banking Sector; Business Groups; Resilience; Safe Heaven; Gold; Oil; Peer-to-Peer Lending Market; Foreign Trading; Stock Market Volatility; Extreme Events (search for similar items in EconPapers)
JEL-codes: F4 F62 G15 G17 G3 O16 (search for similar items in EconPapers)
Date: 2022
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