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Ownership structures and effects of related lending and loan guarantees on firm performance in business groups

This study identifies a sample of listed Indian business group firms, which exhibit an increasing trend in leverage, related lending and loan guarantees. Business groups in India, primarily adopt pyramidal structure in which decision making is done through control rights approach. The paper examines...

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Main Authors: Yogesh, Maheshwari, Pankaj, Gupta
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2018
Online Access:http://journalarticle.ukm.my/19709/1/14819-90569-1-PB.pdf
http://journalarticle.ukm.my/19709/
https://ejournal.ukm.my/ajac/issue/view/1084/showToc
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spelling my-ukm.journal.197092022-09-15T01:20:33Z http://journalarticle.ukm.my/19709/ Ownership structures and effects of related lending and loan guarantees on firm performance in business groups Yogesh, Maheshwari Pankaj, Gupta This study identifies a sample of listed Indian business group firms, which exhibit an increasing trend in leverage, related lending and loan guarantees. Business groups in India, primarily adopt pyramidal structure in which decision making is done through control rights approach. The paper examines the ownership structures in business groups and studies the effects of related lending and loan guarantees on firm performance in such business groups through a panel data regression with fixed effects. The regression results suggest that lending and loan guarantees to related parties affect the operating performance of group firms positively. The relationship has been found to be significant for most of the categories of business groups studied for the two measures of firm performance, namely gross profit to asset ratio and return on assets. However, their effect on market value is found to be negative, leading to an inference that such deals are taken adversely by the market. Penerbit Universiti Kebangsaan Malaysia 2018 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/19709/1/14819-90569-1-PB.pdf Yogesh, Maheshwari and Pankaj, Gupta (2018) Ownership structures and effects of related lending and loan guarantees on firm performance in business groups. Asian Journal of Accounting and Governance, 9 . pp. 77-86. ISSN 2180-3838 https://ejournal.ukm.my/ajac/issue/view/1084/showToc
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description This study identifies a sample of listed Indian business group firms, which exhibit an increasing trend in leverage, related lending and loan guarantees. Business groups in India, primarily adopt pyramidal structure in which decision making is done through control rights approach. The paper examines the ownership structures in business groups and studies the effects of related lending and loan guarantees on firm performance in such business groups through a panel data regression with fixed effects. The regression results suggest that lending and loan guarantees to related parties affect the operating performance of group firms positively. The relationship has been found to be significant for most of the categories of business groups studied for the two measures of firm performance, namely gross profit to asset ratio and return on assets. However, their effect on market value is found to be negative, leading to an inference that such deals are taken adversely by the market.
format Article
author Yogesh, Maheshwari
Pankaj, Gupta
spellingShingle Yogesh, Maheshwari
Pankaj, Gupta
Ownership structures and effects of related lending and loan guarantees on firm performance in business groups
author_facet Yogesh, Maheshwari
Pankaj, Gupta
author_sort Yogesh, Maheshwari
title Ownership structures and effects of related lending and loan guarantees on firm performance in business groups
title_short Ownership structures and effects of related lending and loan guarantees on firm performance in business groups
title_full Ownership structures and effects of related lending and loan guarantees on firm performance in business groups
title_fullStr Ownership structures and effects of related lending and loan guarantees on firm performance in business groups
title_full_unstemmed Ownership structures and effects of related lending and loan guarantees on firm performance in business groups
title_sort ownership structures and effects of related lending and loan guarantees on firm performance in business groups
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2018
url http://journalarticle.ukm.my/19709/1/14819-90569-1-PB.pdf
http://journalarticle.ukm.my/19709/
https://ejournal.ukm.my/ajac/issue/view/1084/showToc
_version_ 1744354639137996800
score 13.211869

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