Internal Capital Markets in Family Business Groups During the Global Financial Crisis
55 Pages Posted: 2 Nov 2014 Last revised: 18 Dec 2018
Date Written: December 5, 2018
Using a carefully-constructed global dataset of family business groups, we show that group affiliation moderates corporate investment declines experienced in the 2008 Global Financial Crisis. During this period, group internal capital market activity intensifies. The investment activity of group firms with high-growth profiles become more reliant on intra-group capital transfers. Group firms do not realize more negative crisis-period stock returns than other firms, while post-crisis, they outperform standalone firms. Our study sheds new light on the heterogeneity of firm-level responses to the largest capital market disruption in recent history.
Keywords: Family business groups, Internal capital markets, Corporate investments, Financial crisis
JEL Classification: G01, G31, G32
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