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Title:Financial Constraints and Continental Business Groups: Evidence from German Konzerns PDF Logo
Authors:Schäfer, Dorothea
Gorodnichenko, Yuriy
Talavera, Oleksandr
Issue Date:2006
Series/Report no.:DIW-Diskussionspapiere 590
Abstract: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.
Subjects:concern
business group
investment
liquidity constraints
JEL:G34
G32
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
DIW-Diskussionspapiere

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