Access to internal capital, creditor rights and corporate borrowing: Does group affiliation matter?

Thapa, Chandra; Rao, Sandeep; Farag, Hisham; Koirala, Santosh

doi:10.1016/j.jcorpfin.2020.101585

Cited by 29 publications

(11 citation statements)

References 54 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Aranda-Usón et al (2019) presented the influences of financial resources in businesses on achieving a more advanced circular economy (CE). Thapa et al (2020) presented the differential effects between standalone and business group firms on the credit restructuring of intense creditor liberties that increase credit supply and extend financially constrained firms to achieve higher benefits. Siegrist et al (2020) integrated a conceptual SCF framework with risk management, intangible assets and cost reduction by proficient resource utilization and revenue improvement to highlight how firms could utilize environmental sustainability in their long-term financial decision-making frameworks.…”

Section: Introductionmentioning

confidence: 99%

Challenges and Trends in Sustainable Corporate Finance: A Bibliometric Systematic Review

Bui

Ali

Tsai

et al. 2020

JRFM

View full text Add to dashboard Cite

Sustainable corporate finance is an attractive field of study in sustainability literature; however, the literature lacks systematic bibliometric analysis that provides a comprehensive review to clarify state-of-the-art sustainable corporate finance and that discusses new opportunities and potential instructions for further studies. To address this gap, this study adopts a literature review, bibliometric analysis, network analysis and co-wording technique to systematically investigate the Scopus database. In total, 30 keywords listed at least three times are used and are divided into six clusters considering six fields of research, namely, corporate finance in corporate sustainability, sustainable competitive advantages, sustainable stakeholder engagement, circular economy, sustainable corporate finance innovation and risk management and sustainable supply chain ethics. This study contributes to examining the sustainable corporate finance bibliometric status to provide directions for future studies and practical accomplishment. The sustainable corporate finance knowledge gaps are (1) corporate finance in sustainability; (2) sustainable competitive advantages; (3) sustainable stakeholder engagement; (4) circular economy; (5) sustainable corporate finance innovation and risk management; and (6) sustainable supply chain ethics. The knowledge gaps and future directions are also discussed.

show abstract

Section: Introductionmentioning

confidence: 99%

Challenges and Trends in Sustainable Corporate Finance: A Bibliometric Systematic Review

Bui

Ali

Tsai

et al. 2020

JRFM

View full text Add to dashboard Cite

show abstract

“…Even, Almeida et al (2015) indicated in their study based on Korean business groups that internal capital market helps their affiliated firms in absorbing the negative effect of the Asian crisis on investment. Internal capital market of groups can safeguard their affiliated firms in times when these firms face external financing shocks (Thapa et al, 2020) But, a negative image of the group can act as an obstacle for affiliated firms in arranging funds from financial institutions (Wasiuzzaman et al, 2020). Additionally, the group's overall risk may also act as a deciding factor in arranging outside finances for their affiliated firms.…”

Section: Group Affiliation and Financial Constraintsmentioning

confidence: 99%

“…Additionally, the group's overall risk may also act as a deciding factor in arranging outside finances for their affiliated firms. Based on the above facts, it is debatable whether group affiliation reduces or enhances the financial constraints of their affiliated firms (Buchuk et al, 2014;Almieda et al, 2015;Lou et al, 2019;Wasiuzzaman et al, 2020;Thapa et al, 2020;Ren et al, 2021).…”

Section: Group Affiliation and Financial Constraintsmentioning

confidence: 99%

Does group affiliation impact financial constraints? Evidence from India

Bhatia

Chakrabarti

2022

View full text Add to dashboard Cite

PurposeThis study aims to primarily investigate two vital questions: First, the authors examine whether group-affiliated firms are more (less) financially constrained vis-à-vis standalone firms. The authors estimate working capital investment (WCI) to cash flow sensitivity to understand the nature of financial constraints. Second, the authors further investigate the impact of working capital level on firm values and risks between group-affiliated and standalone firms.Design/methodology/approachThis paper uses balanced panel data set from the year 2012–2019. The authors employ propensity score matching to ascertain comparable firm attributes from business group and standalone firms. This process yields 280 firms (140 in each group) after controlling the firm heterogeneity between these two groups. All the models are estimated using fixed-effect regression.FindingsThe authors find that group affiliated firms are less financially constrained than standalone firms. The results show that WCI to cash flow sensitivity is higher in standalone firms vis-a-vis group-affiliated firms, implying that standalone firms are more financially constrained than group-affiliated firms. Second, the authors find that firm values are more sensitive to working capital level in standalone firms versus group-affiliated firms. Furthermore, the authors document that the risk of the standalone firms is less sensitive to working capital level than that of group-affiliated firms.Originality/valueMost recent studies exploring the role of group affiliation in financing constraints have not controlled for heterogeneity among group-affiliated firms vis-à-vis standalone firms, which may arise due to variation in firm characteristics. Unlike prior studies, this research design ascertains comparable firm attributes between business group and standalone firms, implying firms belonging to these two groups differ by the exogeneous affiliation (business group and standalone firms). The authors document that group-affiliated firms are less financially constrained than standalone firms controlling firm-level heterogeneity between group-affiliated and standalone firms. To the best of the authors' knowledge, no such work has been previously done in general (specifically in India).

show abstract

“…8 However, other empirical studies such as Acharya and Subramanian (2009) and Acharya et al (2011) show that stronger creditor rights could have an adverse effect by reducing firms' risk-taking and investment into innovation. Acknowledging the apparently opposite views on the effects of creditor rights on firm lending and investment, Thapa et al (2020) examine the role of firm's access to internal capital, an important firm characteristic, as a conditioning factor for the effects of creditor rights.…”

Section: Related Literaturementioning

confidence: 99%

Bankruptcy costs, idiosyncratic risk, and long-run growth

Acosta‐Ormaechea

Morozumi²

2022

Macroecon. Dynam.

View full text Add to dashboard Cite

This paper analyzes how idiosyncratic risk, measured by the variance of firm-level idiosyncratic shocks, affects long-run growth when bankruptcy costs are present. These costs are incurred by creditors during the bankruptcy procedure of failing firms. In an endogenous growth model with bankruptcy costs where firms privately observe the outcome of idiosyncratic shocks, an increase in idiosyncratic risk reduces long-run growth. This happens because, when bankruptcy costs are present, higher idiosyncratic risk enlarges the wedge between the rental rate of capital and its marginal product, thereby slowing down capital accumulation. This growth-reducing effect of idiosyncratic risk is stronger when bankruptcy costs are higher. Empirical support for these propositions is provided in a growth regression that exploits cross-country variations in the dispersion of firms’ real sales growth as a proxy for idiosyncratic risk along with recovery rates as a measure that proxies the inverse of bankruptcy costs.

show abstract

Access to internal capital, creditor rights and corporate borrowing: Does group affiliation matter?

Cited by 29 publications

References 54 publications

Challenges and Trends in Sustainable Corporate Finance: A Bibliometric Systematic Review

Challenges and Trends in Sustainable Corporate Finance: A Bibliometric Systematic Review

Does group affiliation impact financial constraints? Evidence from India

Bankruptcy costs, idiosyncratic risk, and long-run growth

Contact Info

Product

Resources

About