How Do Internal Capital Markets Work? Evidence from the Great Recession*

Buchuk, David; Larraín, Borja; Prem, Mounu; Infante, F. Urzua

doi:10.1093/rof/rfz022

Cited by 29 publications

(26 citation statements)

References 67 publications

(91 reference statements)

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“…Additionally, internal capital markets can play the role of a substitute and mitigate financial market failures during economic crises or shocks (Matvos and Seru, 2014). For instance, Buchuk et al (2020) and Santioni et al (2020) document the role played by internal capital markets during the global financial crisis in Chile and Italy. In both cases, access to internal capital markets helps affiliated firms in facing crises.…”

Section: Internal Capital Markets and Business Group Membershipmentioning

confidence: 99%

Investors’ Perception of Business Group Membership during An Economic Crisis: Evidence from the COVID-19 Pandemic

Ducret

2021

SSRN Journal

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This paper examines how investors perceive business group membership in Korea during the COVID-19 pandemic. Stock price performance analysis reveals evidence of a time-varying and heterogeneous value of affiliation: investors discount business group affiliation during a market collapse, but are willing to pay a premium for affiliation during market recovery. Overall, this pattern is more pronounced for financially weak affiliates and large business groups. The results further show that business group membership alleviates investors' concerns regarding financial flexibility, highlighting the role of internal capital markets as a substitute for external finance.

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Section: Internal Capital Markets and Business Group Membershipmentioning

confidence: 99%

Investors’ Perception of Business Group Membership during An Economic Crisis: Evidence from the COVID-19 Pandemic

Ducret

2021

SSRN Journal

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“…A total of 55 (40) firms were providers (receivers) at least one year during this period. Scholars have found internal capital markets to be crucial for the performance of firms around the world in the 1990s and 2000s, particularly during the Asian and Euro crises (Gopalan et al, 2007;Almeida et al, 2015;Santioni et al, 2020;Buchuk et al, 2020).…”

Section: The Role Of Firms Within Groups: Pyramids and Internal Capital Marketsmentioning

confidence: 99%

Privatization and business groups: Evidence from the Chicago Boys in Chile

Aldunate

González

Prem

et al. 2020

Explorations in Economic History

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Business groups are the predominant organizational structure in modern Chile. This article tests the long-standing hypothesis that the privatization reform implemented by the "Chicago Boys" during the Pinochet regime facilitated the creation of new groups and hence the renovation of the country's elites. Using new data we find that firms sold during this privatization later became part of new business groups, process aided by an economic crisis that debilitated traditional elites. Moreover, some firms were bought by Pinochet's allies and were later used as providers of capital within groups. We conclude that privatizations can empower outsiders to replace business elites.

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“… See Gopalan, Nanda, and Seru (2007),Boutin, Cestone, Fumagalli, Pica, and Serrano-Velarde (2013),Buchuk, Larrain, Munoz, and Urzúa (2014),Almeida, Kim, and Kim (2015), andBuchuk, Larrain, Prem, and Urzúa (2019).…”

mentioning

confidence: 99%

The internal labor markets of business groups

Huneeus¹,

Larraín

et al. 2021

Journal of Corporate Finance

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This paper provides novel micro evidence of labor mobility inside business groups. We show that worker flows between group firms are significantly more prevalent than between unaffiliated firms. We also find that groups respond to changing business conditions by reallocating top-occupation workers across affiliated firms. The wages of top workers increase as they move within the group. Internal labor reallocation is stronger when the worker's origin firm controls the destination firm and in more complex hierarchical structures. Our results are consistent with the hypothesis that groups ease the transfer of intangible inputs, such as management practices, across firms.

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How Do Internal Capital Markets Work? Evidence from the Great Recession*

Cited by 29 publications

References 67 publications

Investors’ Perception of Business Group Membership during An Economic Crisis: Evidence from the COVID-19 Pandemic

Investors’ Perception of Business Group Membership during An Economic Crisis: Evidence from the COVID-19 Pandemic

Privatization and business groups: Evidence from the Chicago Boys in Chile

The internal labor markets of business groups

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