The Benefits and Costs of Group Affiliation: Evidence from East Asia

Stijn Claessens (), Larry Lang and Joseph P.H. Fan

No 3364, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper investigates the benefits and associated agency costs of using internal capital markets through affiliating with groups using data of two thousand firms from nine East Asian economies between 1994-96. We find that mature and slow-growing firms with ownership structures more likely to create agency problems gain more from group affiliation, while young and high-growth firms are more likely lose. Agency problems are important explanatory factors of firm value in economies outside Japan, but less so in Japan. Consistent with the literature, financially constrained firms benefit from group affiliation. Our results are robust to different time periods and estimation techniques.

Keywords: Groups; Agency costs; Emerging markets (search for similar items in EconPapers)
JEL-codes: G31 G32 O34 O40 (search for similar items in EconPapers)
Date: 2002-05
New Economics Papers: this item is included in nep-cfn, nep-dev and nep-ind
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: The benefits and costs of group affiliation: Evidence from East Asia (2006)
Working Paper: The Benefits and Costs of Group Affiliation: Evidence from East Asia (2002)
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