scholarly journals Does Business Group Affiliation Matter for Superior Performance? Evidence from Pakistan

2018 ◽  
Vol 10 (9) ◽  
pp. 3060 ◽  
Author(s):  
Ishtiaq Ahmad ◽  
Judit Oláh ◽  
József Popp ◽  
Domicián Máté
Keyword(s):  
Stock Market ◽  
Business Groups ◽  
Business Group ◽  
Superior Performance ◽  
Market Failures ◽  
Group Affiliation ◽  
Return On Assets ◽  
Financial Firms ◽  
Business Group Affiliation ◽  
Group Memberships

Business groups have been described as improving the value of the affiliated firms they control, which is often beyond the capability of standalone firms. The purpose of the current study is to analyze the financial performance of affiliates of diversified Pakistani business groups relative to standalone firms. The current study employs data from 284 Pakistani listed non-financial firms from 2008–2015. In order to test the hypotheses, two dependent variables are used, namely, accounting (Return on Assets (ROA)) and stock market (Tobin’s Q) measures of performance. Specifically, this study probes and compares the performance measures of group member and standalone firms. The findings of the study suggest that business group memberships have statistically significant effects on accounting and stock market measures of firm performance. In addition, size and sales growth have an increasing effect on the performance of firms. We believe that business groups in Pakistan are efficient economic actors and can be considered responses to high transaction costs and market failures.

Corporate R&D Investments and Risk

2017 ◽  
pp. 211-231
Author(s):  
Mine Uğurlu
Keyword(s):  
Sustainable Development ◽  
Capital Markets ◽  
Financial Constraints ◽  
Business Groups ◽  
Business Group ◽  
Corporate Diversification ◽  
Subprime Crisis ◽  
Group Affiliation ◽  
Earnings Volatility ◽  
Business Group Affiliation

Corporate R&D Investments,that constitute basis for sustainable development, are influenced by external and firm-specific risks.Evidence shows that firms in Turkey have increased R&D spending during subprime crisis despite its procyclicality in most of the emerging countries.This chapter investigates if business group affiliation or corporate diversification that is predominant in Turkey stimulate R&D investments under risk.It focuses on internal capital markets of business groups or conglomerates that may enhance R&D spending by reducing financial constraints, and likelihood of distress of the affiliated firms.The results reveal that group affiliation and diversification positively affect corporate R&D spending when firm-specific risks rise.These results are significant during the global crisis period.Group-affiliated corporations increase their R&D investments as idiosyncratic risks rise.The diversified conglomerates increase R&D investments when earnings volatility and equity erosion rise.Results indicate that large firms are more inclined to reduce R&D investments under risk.

scholarly journals Business Group Affiliation and Firm Performance—Evidence from Pakistani Listed Firms

2018 ◽  
Vol 57 (3) ◽  
pp. 351-371
Author(s):  
Waseemullah . ◽  
Arshad Hasan
Keyword(s):  
Agency Theory ◽  
Market Failure ◽  
Business Groups ◽  
Business Group ◽  
Performance Measure ◽  
Sample Period ◽  
Group Affiliation ◽  
Internal Markets ◽  
Excess Value ◽  
Business Group Affiliation

This study analyses the financial performance of business group affiliated firms relative to stand-alone firms in Pakistan. The investigations are done across the sample period of 1993-2012. The study employs ‘Chop shop’ methodology to construct the excess values (performance measure); in order to compare the results with earlier well documented studies of both developed and emerging countries. Both univariate and regression analyses clearly demonstrate that group affiliated firms are trading at discount (underperform relative to stand-alone firms) during the sample period. Despite the historical success in the past, the findings suggest that business groups evolve differently in the post financial reforms and privatisation programs era. The findings are consistent with the market failure argument and agency theory. However, the study finds a little evidence of efficient internal markets of Pakistani business groups. Keywords: Business Groups, Group Affiliation, Excess Value, Market Failure Theory, Agency Theory, Chop Shop Methodology

scholarly journals Business Group-Affiliation and Corporate Social Responsibility: Evidence from Listed Companies in China

2021 ◽  
Vol 13 (4) ◽  
pp. 2110
Author(s):  
Xin Huang ◽  
Xianling Jiang ◽  
Wei Liu ◽  
Qian Chen
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Emerging Market ◽  
Business Groups ◽  
Listed Companies ◽  
Business Group ◽  
Vital Role ◽  
Group Affiliation ◽  
Business Group Affiliation ◽  
Corporate Social

Business groups have played a vital role in the development of emerging markets. However, we share very limited understanding in the role of business group that act on affiliated firms’ CSR performance. Using manually sorted data on A-share listed companies and business groups in China from 2010–2017, we examine whether a company’s business group-affiliation affects its corporate social responsibility (CSR) performance and the mediating mechanisms of this association. Our empirical models show that group companies bear a higher level of social responsibility compared to independent companies. This positive relationship between group-affiliation and social responsibility relies on resource allocation through internal capital markets, rent-seeking initiatives, and consideration of corporate reputation. Moreover, group affiliation benefits the firm’s CSR performance in employee’s responsibilities, consumers’ responsibilities and environmental responsibilities, while significantly lower the shareholders’ responsibilities. Our empirical valuation of group companies’ CSR levels can serve as a benchmark for emerging market companies implementing social responsibility policies.

Does Internationalization of Business-Group-Affiliated Firms Depend on Their Performance?

2018 ◽  
pp. 153-165
Author(s):  
Subhasree Mukherjee ◽  
Kavitha Pradeep
Keyword(s):  
Fixed Effects ◽  
Positive Relationship ◽  
Business Groups ◽  
Business Group ◽  
Implicit Assumption ◽  
Fixed Effects Model ◽  
Group Affiliation ◽  
Business Group Affiliation ◽  
The Impact ◽  
Degree Of Internationalization

Previous research on international operations of the business groups (BG) have predominantly looked into the effects of internationalization on various frontiers of business. Pertaining to emerging economies, the implicit assumption is internationalization helps to avert the uncertainties of market imperfections. We raise doubt on the implicit assumption that just being affiliated to a parent firm will provide the resources for internationalization. Therefore, we have taken up this study, to understand the dynamics of emerging economy multinationals, which are characterized by their asset seeking nature to internationalize. We have tested our hypotheses on listed Indian firms. We have selected top 499 BSE listed companies, which had reported the highest amount of sales in 2010 as the base, and we generated a balanced panel dataset of 2994 firm years using the observations for the period 2010-2015. We used General Linear Square (GLS) fixed effects model to examine the impact of performance of BG affiliated firms on their degree of internationalization. We expected a positive relationship between firm performance and degree of internationalization, which was further anticipated to be positively moderated by business group affiliation of firms.

Performance of business group affiliated firms in emerging markets

2018 ◽  
Vol 13 (6) ◽  
pp. 1538-1558 ◽  
Author(s):  
Anish Purkayastha
Keyword(s):  
Emerging Markets ◽  
Business Group ◽  
Causal Chain ◽  
Superior Performance ◽  
Group Affiliation ◽  
Strategic Decisions ◽  
Content Type ◽  
Subsequent Performance ◽  
Mediating Role ◽  
Business Group Affiliation

Purpose The purpose of this paper is to explore the existing mechanism through which business group affiliated firms in emerging markets (EMs) continue to generate superior performance. Design/methodology/approach The authors build our argument on the basis of how business group affiliation in EM facilitates internationalization and investment into innovation in affiliated firms compared to un-affiliated firm, resulting in higher firm performance. The authors use advance statistical modeling – causal mediation analysis to separate direct effect and indirect effect of business group affiliation in EM on performance through internationalization and investment into innovation of business group affiliated firms as mediating variables. Findings Based on 122,479 observations (firm year) from 17,235 Indian business group affiliated and un-affiliated firms, the findings help to identify that internationalization and investment into innovation of business group affiliated firms do have a mediating role in affiliation–performance relationship for EM business groups. Originality/value This study unravels the existing causal chain between business group affiliation in EMs and subsequent performance of affiliated firms. The authors complement institutional argument for superior performance of business group affiliation and focus on the performance implication of mediating strategic decisions in affiliated firms.

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