Business groups, financing constraints, and investment: the case of India

Shubashis Gangopadhyay, Robert Lensink and Remco van der Molen
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Remco van der Molen: Groningen University

No 200116, CCSO Working Papers from University of Groningen, CCSO Centre for Economic Research

Abstract: Abstract We examine the effect of business group affiliation on corporate investment behavior in India. We use a data set containing 684 Indian listed companies for the 1989-1997 period. We estimate a simple investment equation and find evidence that cash flow has a positive effect on investment spending of stand-alone firms, whereas for group affiliates cash flow is either insignificant or has a much lower coefficient. This suggests that business group affiliates have better access to external funds than stand-alone firms.

Date: 2001
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Related works:
Journal Article: Business groups, financing constraints and investment: the case of India (2003)
Working Paper: Business groups, financing constraints, and investment: the case of India (2002)
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