Investment efficiency of firms outside the business group

Yunxiao Liu, Woochan Kim, Taeyoon Sung

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


Using Korean firms between 1987 and 2010, we show that non-group firms suffer more from investment inefficiency if they operate in industries where group firms belong to larger business groups. We also find that this effect exists mainly during a period characterized by a capital supply shortage and low cash flow pledgeability to investors. Further analyses indicate that the effect is attributable not to human capital constraints, but external financing constraints imposed by business group firms and that causality runs from business group strength to investment inefficiency of non-group firms.

Original languageEnglish
Article number102105
JournalJournal of Corporate Finance
Publication statusPublished - 2021 Dec

Bibliographical note

Publisher Copyright:
© 2021

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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