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Does business group affiliation matter for external debt finance? Evidence from India

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  • Apalak Khatua

    (XLRI Xavier School of Management)

Abstract

We investigate in the Indian context how developing-economy business groups make capital structure choices during economic reforms. Using eighteen years of panel data, we find a general trend towards deleveraging, reduced access to deficit financing, and higher costs of debt financing for group-affiliated firms. We further find that the first two of these trends are more pronounced for firms affiliated with large business groups. Our findings contribute to resource-dependence theory by demonstrating that the size of business groups is positively related to their ability to better manage environmental interdependence and uncertainty during economic reforms.

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  • Apalak Khatua, 2017. "Does business group affiliation matter for external debt finance? Evidence from India," Asian Business & Management, Palgrave Macmillan, vol. 16(4), pages 290-322, December.
    • Handle: RePEc:pal:abaman:v:16:y:2017:i:4:d:10.1057_s41291-017-0021-7
    DOI: 10.1057/s41291-017-0021-7
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    Cited by:

    1. Khatua, Apalak, 2023. "Why is diversification not dead? Evidence from family business groups during economic reforms in India," Journal of Family Business Strategy, Elsevier, vol. 14(2).

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