Resumé
| Originalsprog | Engelsk |
|---|---|
| Tidsskrift | Journal of Corporate Finance |
| Vol/bind | 58 |
| Sider (fra-til) | 307-328 |
| Antal sider | 22 |
| ISSN | 0929-1199 |
| DOI | |
| Status | Udgivet - okt. 2019 |
Emneord
- Business groups
- Corporate control
- Financial constraints
- Investment financing
- Mergers and acquisitions
Citer dette
}
A New Order of Financing Investments : Evidence from Acquisitions by India's Listed Firms. / Jindal, Varun; Seth, Rama.
I: Journal of Corporate Finance, Bind 58, 10.2019, s. 307-328.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › peer review
TY - JOUR
T1 - A New Order of Financing Investments
T2 - Evidence from Acquisitions by India's Listed Firms
AU - Jindal, Varun
AU - Seth, Rama
PY - 2019/10
Y1 - 2019/10
N2 - We propose a new order of financing investments based on the considerations of control and financial constraints in a market with the presence of business groups. We base our analysis on a sample of acquisitions, one of the largest forms of investments, made by India's publicly listed firms from 1997 through 2016. We test the relative propensity of group-affiliated firms, as well as that of standalone (non-affiliated) firms, to finance their investments with stock on the one hand, and either cash or debt on the other. We find that group-affiliated bidders have the greatest propensity to finance their investments with stock when taking over firms affiliated with the same business group (within-group acquisitions), followed by standalone firms making acquisitions (standalone acquisitions). Finally, group-affiliated bidders acquiring either standalone firms or firms not affiliated with their group (outside-group acquisitions) have the lowest propensity to finance their investments with stock. The evidence of higher stock-financing of within-group acquisitions is robust to alternative explanations of tunneling and propping up in business groups.
AB - We propose a new order of financing investments based on the considerations of control and financial constraints in a market with the presence of business groups. We base our analysis on a sample of acquisitions, one of the largest forms of investments, made by India's publicly listed firms from 1997 through 2016. We test the relative propensity of group-affiliated firms, as well as that of standalone (non-affiliated) firms, to finance their investments with stock on the one hand, and either cash or debt on the other. We find that group-affiliated bidders have the greatest propensity to finance their investments with stock when taking over firms affiliated with the same business group (within-group acquisitions), followed by standalone firms making acquisitions (standalone acquisitions). Finally, group-affiliated bidders acquiring either standalone firms or firms not affiliated with their group (outside-group acquisitions) have the lowest propensity to finance their investments with stock. The evidence of higher stock-financing of within-group acquisitions is robust to alternative explanations of tunneling and propping up in business groups.
KW - Business groups
KW - Corporate control
KW - Financial constraints
KW - Investment financing
KW - Mergers and acquisitions
KW - Business groups
KW - Corporate control
KW - Financial constraints
KW - Investment financing
KW - Mergers and acquisitions
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U2 - 10.1016/j.jcorpfin.2019.04.007
DO - 10.1016/j.jcorpfin.2019.04.007
M3 - Journal article
VL - 58
SP - 307
EP - 328
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
ER -