This study investigates whether business groups can harm the capital allocation efficiency of non-business group firms. From a sample of Korean firms (1987 to 2010), we compute an annual index of the collective strength and dominance of large business groups (LBG) per industry. We find that this index is negatively associated with the industry-level capital allocation efficiency of non-LBG firms during a period characterized by underdeveloped financial markets and weak investor protection. The association is stronger in industries that may lack collateral or internal equity capital. Results are robust to different measures of the index and investment opportunity.
JEL classification: G3, G31, G32, G34
Keywords: Business group; Internal capital market; Capital allocation efficiency; Financial sector development; Investor protection; Asian financial crisis
학회소식
[2016년 제 4차] Do Business Groups Harm Capital Allocation Efficien
작성자 : 관리자
조회수 : 766
게시일 :
2016-12-21
