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Does corporate groups accrue higher leverage: Emerging market evidence

The Journal of Finance and Accounting Research

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Field Value
 
Title Does corporate groups accrue higher leverage: Emerging market evidence
 
Creator Khan, Safi Ullah
Rizwan, Mohammad Faisal
 
Description This article explores the capital structure composition of group-affiliated firms. We find that group member firms choose to accrue higher debt ratios compared to non-group counterparts. Further disentangling the higher debt ratios of group-affiliates, we find risk-sharing or co-insurance effect whereby business groups enable member firms to share risks through income-smoothing and intra-group reallocation of resources. Our results suggest that business groups act as internal capital markets, assist affiliated firms overcome financial constraints, and ease access to external capital. Lastly, our study shows that group affiliations positively contribute to firms’ better financial performance relative to the non-group firms.
 
Publisher Department of Finance, School of Business and Economics, University of Management and Technology, Lahore, Pakistan
 
Date 2020-02-28
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
 
Format application/pdf
 
Identifier https://ojs.umt.edu.pk/index.php/jfar/article/view/336
10.32350/JFAR/0201/02
 
Source Journal of Finance and Accounting Research; Vol 2 No 1 (2020): February; 1-1
2663-838X
2617-2232
10.32350/JFAR/0201
 
Language eng
 
Relation https://ojs.umt.edu.pk/index.php/jfar/article/view/336/147
 
Rights Copyright (c) 2020 Safi Ullah Khan, Mohammad Faisal Rizwan
http://creativecommons.org/licenses/by/4.0