Financial Constraints and Continental Business Groups: Evidence from German Konzerns

Using a unique, large panel of German firms, we examine whether participation in business groups reduces the sensitivity of investment to cash flow. The main finding is that the reduction in the sensitivity is small for small firms and negligible for medium and large firms. We argue that by virtue of the continental business model, gains from business groups should be in better contract enforcement and coordination rather than in internalizing capital markets.

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Year of publication:	2006
Authors:	Schäfer, Dorothea ; Gorodnichenko, Yuriy ; Talavera, Oleksandr
Publisher:	Berlin : Deutsches Institut für Wirtschaftsforschung (DIW)
Subject:	concern \| business group \| investment \| liquidity constraints

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Series:	DIW Discussion Papers ; 590
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	514139005 [GVK] hdl:10419/18483 [Handle] RePEc:diw:diwwpp:dp590 [RePEc]
Classification:	G34 - Mergers; Acquisitions; Restructuring; Corporate Governance ; G32 - Financing Policy; Capital and Ownership Structure
Source:	EconStor

Persistent link: https://www.econbiz.de/10010260962