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

Shubashis Gangopadhyay, Robert Lensink, Remco van der Molen

Research output: Working paperAcademic

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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.
Original languageEnglish
Number of pages32
Publication statusPublished - 2002

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