Business Group Affiliation and the Risk of PAE Litigation

Abstract 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-alone firms. 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. Received July 3, 2017; editorial decision April 7, 2018 by Editor Wei Jiang. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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Corporate social responsibility, business group affiliation and shareholder wealth: evidence from an emerging market

Social Responsibility Journal ◽

10.1108/srj-08-2020-0337 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Eswaran Velayutham ◽

Vijayakumaran Ratnam

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Emerging Market ◽

Business Group ◽

Shareholder Wealth ◽

Group Affiliation ◽

Content Type ◽

Business Group Affiliation ◽

Corporate Social ◽

The Relationship

Purpose This paper aims to examine the relationship between corporate social responsibility (CSR) and shareholder wealth arising from announcement returns of security issuance from a frontier market. It also explores the role of business group affiliation (BGA) on this relationship. Design/methodology/approach The study uses short-term scenarios to examine the link between CSR and shareholder wealth using the event study methodology which helps us mitigate the reverse causality problems related to studies of the relationship between CSR and firm value. Abnormal returns surrounding the security issue announcements were generated using the market model. Findings This paper finds that security issuers with high CSR scores are associated with higher shareholder value. However, this paper finds that CSR activities of security issuers with BGA are value-destroying which is consistent with the agency perspective of CSR. Research limitations/implications This study is limited to only one nascent market, namely the Colombo Stock Exchange. Originality/value This study documents that CSR and BGA are important determinants, among others, of stock price reactions to security offerings in emerging markets.

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Corporate R&D Investments and Risk

Ethics and Sustainability in Global Supply Chain Management - Advances in Logistics, Operations, and Management Science ◽

10.4018/978-1-5225-2036-8.ch012 ◽

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.

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