Investigación
calendar_month Publicación: 19/11/2018
The Effects of Losing a Business Group Affiliation
Autor: Borja Larraín, Giorgio Sertsios, Francisco Urzúa
We propose a novel identification strategy for estimating the effects of business group affiliation. We study two-firm business groups, some of which split up during the sample period, leaving some firms as stand-alones. We instrument for stand-alone status using shocks to the industry of the other group firm. We find that firms that become stand-alone reduce leverage and investment. Consistent with collateral cross-pledging, the effects are more pronounced when the other firm had high tangibility. Consistent with capital misallocation in groups, the reduction in leverage is stronger in firms that had low (high) profitability (leverage) relative to industry peers.
Fuente: Review of Financial Studies
IF 2017: 4,27, AI 2017: 7,249
