Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian Business Groups
Emerging markets like India have poorly functioning institutions, leading to severe agency and information problems. Business groups in these markets have the potential both to offer benefits to member firms, and to destroy value. We analyze the performance of affiliates of diversified Indian business groups relative to unaffiliated firms. We find that accounting and stock market measures of firm performance initially decline with group diversification and subsequently increase once group diversification exceeds a certain level. Unlike U.S. conglomerates' lines of business, and similar to the affiliates of U.S. LBO associations, affiliates of the most diversified business groups outperform unaffiliated firms. Copyright The American Finance Association 2000.
Year of publication: |
2000
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Authors: | Khanna, Tarun ; Palepu, Krishna |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 55.2000, 2, p. 867-891
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Publisher: |
American Finance Association - AFA |
Saved in:
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