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Business Group Affiliation and Resilience to COVID-19 Outbreak in India

In: Financial Transformations Beyond the COVID-19 Health Crisis

Author

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  • Shreya Biswas
  • Nivedita Sinha

Abstract

The economic and market impact of COVID-19 in India has been quite disruptive, creating stress for Indian corporates. We observe the listed firms in India during the COVID-19 health crisis and the stringent lockdown period and investigate the performance of business group-firms as compared to a matched sample of standalone firms. We find that business group-firms outperformed the standalone firms during the nationwide lockdown as well as the extended lockdown period and attribute this short-term outperformance to the access to internal capital markets. Our results suggest that group-firms with better growth opportunities and affiliated to larger business groups had much higher returns, indicating an efficient transfer of resources amongst group-firms. Our results suggest that the presence of internal capital markets led to lower erosion of market value for shareholders.

Suggested Citation

  • Shreya Biswas & Nivedita Sinha, 2022. "Business Group Affiliation and Resilience to COVID-19 Outbreak in India," World Scientific Book Chapters, in: Sabri Boubaker & Duc Khuong Nguyen (ed.), Financial Transformations Beyond the COVID-19 Health Crisis, chapter 21, pages 615-637, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9781800610781_0021
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    Keywords

    COVID19; Pandemic; Pandemic Outbreak; Health Crisis; Economics; Macroeconomics; Finance; Sustainable Finance; Financial Crisis; Financial Integration; Economic Integration; Global Financial Crisis; Financial Institutions; Corporate Finance; Corporate Governance; Board of Directors; ESG; Corporate Social Responsibility; Sustainable Finance; Stock Markets; Financial Markets; Stock Market Behaviour; Firm Liquidity; Emerging Markets; China; Financial Institutions; Money; Banks; Banking System; Banking Sector; Business Groups; Resilience; Safe Heaven; Gold; Oil; Peer-to-Peer Lending Market; Foreign Trading; Stock Market Volatility; Extreme Events;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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