Business Groups and Profit Redistribution: A Boon or Bane for Firms

R. George, M.R. Kabir, S.W. Douma

Research output: Working paperDiscussion paperOther research output

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Abstract

This study investigates how profit redistribution affects the performance of firms affiliated to business groups.It shows that inefficient profit redistribution causes group-affiliated firms to perform poorly relative to independent firms.This underperformance persists even after controlling for other explanations such as diversification and resource transfers to unlisted firms.The study also shows that profit redistribution is more pronounced for groups of larger size and greater corporate control.The results of the study lend support for the inefficient profit redistribution explanation of the 'business group discount'.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages42
Volume2004-124
Publication statusPublished - 2004

Publication series

NameCentER Discussion Paper
Volume2004-124

Fingerprint

Business groups
Profit
Redistribution
Resources
Underperformance
Diversification
Discount
Corporate control

Keywords

  • Business groups
  • corporate governance
  • firm performance

Cite this

George, R., Kabir, M. R., & Douma, S. W. (2004). Business Groups and Profit Redistribution: A Boon or Bane for Firms. (CentER Discussion Paper; Vol. 2004-124). Tilburg: Finance.
George, R. ; Kabir, M.R. ; Douma, S.W. / Business Groups and Profit Redistribution : A Boon or Bane for Firms. Tilburg : Finance, 2004. (CentER Discussion Paper).
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George, R, Kabir, MR & Douma, SW 2004 'Business Groups and Profit Redistribution: A Boon or Bane for Firms' CentER Discussion Paper, vol. 2004-124, Finance, Tilburg.

Business Groups and Profit Redistribution : A Boon or Bane for Firms. / George, R.; Kabir, M.R.; Douma, S.W.

Tilburg : Finance, 2004. (CentER Discussion Paper; Vol. 2004-124).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Business Groups and Profit Redistribution

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AU - Kabir, M.R.

AU - Douma, S.W.

N1 - Subsequently published in Journal of Business Research, 2008 Pagination: 42

PY - 2004

Y1 - 2004

N2 - This study investigates how profit redistribution affects the performance of firms affiliated to business groups.It shows that inefficient profit redistribution causes group-affiliated firms to perform poorly relative to independent firms.This underperformance persists even after controlling for other explanations such as diversification and resource transfers to unlisted firms.The study also shows that profit redistribution is more pronounced for groups of larger size and greater corporate control.The results of the study lend support for the inefficient profit redistribution explanation of the 'business group discount'.

AB - This study investigates how profit redistribution affects the performance of firms affiliated to business groups.It shows that inefficient profit redistribution causes group-affiliated firms to perform poorly relative to independent firms.This underperformance persists even after controlling for other explanations such as diversification and resource transfers to unlisted firms.The study also shows that profit redistribution is more pronounced for groups of larger size and greater corporate control.The results of the study lend support for the inefficient profit redistribution explanation of the 'business group discount'.

KW - Business groups

KW - corporate governance

KW - firm performance

M3 - Discussion paper

VL - 2004-124

T3 - CentER Discussion Paper

BT - Business Groups and Profit Redistribution

PB - Finance

CY - Tilburg

ER -

George R, Kabir MR, Douma SW. Business Groups and Profit Redistribution: A Boon or Bane for Firms. Tilburg: Finance. 2004. (CentER Discussion Paper).