Investment-cash flow sensitivity to internal capital markets and shareholding structure: evidence from Taiwanese business groups

Yin-Hua Yeh*, Jui-Chia Lin

*此作品的通信作者

研究成果: Article同行評審

摘要

This study examines to what extent investment-cash flow sensitivity in business groups’ is affected by internal capital markets (characterized by related-party transactions) and shareholding structure. We approach the subject by exploring potential financing advantages as contrasted with the agency problem. Using a hand-collected data set to quantify related-party transactions and classify control-enhancing structures, we find that group-affiliated firms with a higher scale of related-party transactions have lower levels of investment-cash flow sensitivity. Further, our results show that related-party transactions are both associated with investment opportunity and the type of shareholding structure, which support both financing advantage and agency hypotheses. The evidence shows that business groups transfer intra-group capital from low-growth to high-growth member firms, but it also demonstrates that the outcomes of these transfers are affected by the type of control-enhancing structure. Additional analysis shows that the agency problem tends to dominate the financing advantage effect in cross-shareholding structures, which leads to overinvestment.

原文English
頁(從 - 到)637–657
頁數11
期刊Eurasian Business Review
11
發行號4
DOIs
出版狀態Published - 12月 2021

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