The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile
We examine the effects of internal capital markets on the propensity of firms to save cash from cash flows. We argue that firms that are providers of funds to related parties must maintain a higher cash flow sensitivity of cash to prevent high levels of pressure on their cash holdings in contrast to...
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| Formato: | Artículo (Article) |
| Lenguaje: | Inglés (English) |
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2020
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| Acceso en línea: | http://hdl.handle.net/1992/47105 |
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ir-1992-471052020-11-04T20:27:12Z The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile Jara, M. Pinto-Gutierrez, C. Pombo, C. Business groups Financial constraints Internal capital markets Pyramidal structure We examine the effects of internal capital markets on the propensity of firms to save cash from cash flows. We argue that firms that are providers of funds to related parties must maintain a higher cash flow sensitivity of cash to prevent high levels of pressure on their cash holdings in contrast to receivers of intra¿holding funds. Based on a sample of Chilean firms, we confirm that firms with high levels of loans to related companies have higher cash flow sensitivities of cash. This relationship is strongest for firms affiliated with business groups and financially constrained firms. We do not find conclusive evidence of loss to the minority shareholders (tunneling) from intra¿group loans. 2020-10-01T16:53:37Z 2020-10-01T16:53:37Z 2019 article publishedVersion http://hdl.handle.net/1992/47105 10.1111/irfi.12276 https://doi.org/10.1111/irfi.12276 eng openAccess application/pdf instname:Universidad de los Andes reponame:Repositorio Institucional Séneca |
| institution |
Universidad de los Andes |
| collection |
DSpace |
| language |
Inglés (English) |
| topic |
Business groups Financial constraints Internal capital markets Pyramidal structure |
| spellingShingle |
Business groups Financial constraints Internal capital markets Pyramidal structure Jara, M. Pinto-Gutierrez, C. Pombo, C. The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile |
| description |
We examine the effects of internal capital markets on the propensity of firms to save cash from cash flows. We argue that firms that are providers of funds to related parties must maintain a higher cash flow sensitivity of cash to prevent high levels of pressure on their cash holdings in contrast to receivers of intra¿holding funds. Based on a sample of Chilean firms, we confirm that firms with high levels of loans to related companies have higher cash flow sensitivities of cash. This relationship is strongest for firms affiliated with business groups and financially constrained firms. We do not find conclusive evidence of loss to the minority shareholders (tunneling) from intra¿group loans. |
| format |
Artículo (Article) |
| author |
Jara, M. Pinto-Gutierrez, C. Pombo, C. |
| author_facet |
Jara, M. Pinto-Gutierrez, C. Pombo, C. |
| author_sort |
Jara, M. |
| title |
The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile |
| title_short |
The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile |
| title_full |
The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile |
| title_fullStr |
The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile |
| title_full_unstemmed |
The effect of intra-group loans on the cash flow sensitivity of cash: Evidence from Chile |
| title_sort |
effect of intra-group loans on the cash flow sensitivity of cash: evidence from chile |
| publishDate |
2020 |
| url |
http://hdl.handle.net/1992/47105 |
| _version_ |
1705934386024677376 |
| score |
12,131701 |