Title
Is group affiliation profitable in developed countries? Not in Belgium
Author
Faculty/Department
Faculty of Applied Economics
Publication type
report
Publication
Antwerp :UA, [*]
Subject
Economics
Source (series)
Research paper / UA, Faculty of Applied Economics ; 2005:14
Volume/pages
24 p.,
Carrier
E
Target language
English (eng)
Affiliation
University of Antwerp
Abstract
Several studies find that business groups create value for affiliated companies in developing countries, which are characterized by weak institutions and poorly functioning markets. In these countries, business groups can act as an intermediary between imperfect markets and individual entrepreneurs. This raises the question whether business groups also create value in countries with strong institutions and well-functioning markets, as there are also substantial costs associated with business groups. We investigate the performance of group-affiliated companies in Belgium, and find that these companies significantly underperform compared to stand-alone companies. Moreover, our results suggest that internal capital markets in Belgian business groups result in misallocation of capital.
Full text (open access)
https://repository.uantwerpen.be/docman/irua/091d52/2822841b.pdf
Handle