A subsidiary of a business group is a legal entity which can raise its own external fund
with limited liability while a division of a conglomerate is not. In spite of the
difference between business groups and conglomerates, prior studies often focus on
conglomerates or do not clearly distinguish them. We directly compare business
groups and conglomerates, especially in investment strategies and firm values.
Because of the limited liability, a business group is likely to choose a risky project more
than a conglomerate and that strategy brings a payoff advantage to a business group
when the success probability is high. Our model also considers tunneling of business
groups and the portfolio of matching single firms. While the participant of newshareholders
and the firm value of a business group decreases with tunneling, when the
success probability is low the group value can be higher than the matching single firms.
학술대회/행사
학술대회안내
[2008년 제 2차] A Distinction between Business Groups and Conglomer
작성자 : 관리자
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게시일 :
2008-05-30
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