Spillover Effects of Capital Expenditure Announcements Within Business Groups

I. Fen Chen, Shao Chi Chang

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)


Using the capital expenditure announcements of Taiwanese business group affiliated firms, this study examines whether the group diversification and ownership structure influence intragroup spillover effects. We find that the stock price reactions of the announcing firms are positively associated with both the stock price reactions and the post-announcement long-term performance of their non-announcing group peers. More importantly, the evidence shows that this positive spillover effect weakens for business groups associated with a pyramidal ownership structure. The evidence supports the conjecture that principal–principal conflicts play an important role in moderating the spillover effects in a business group. The findings further show that the spillover effects are stronger during periods of financial crises. Finally, in the 3-year period following announcements, the non-announcing group members experience declining industry-adjusted performance.

Original languageEnglish
Pages (from-to)709-727
Number of pages19
JournalBritish Journal of Management
Issue number4
Publication statusPublished - 2020 Oct 1

All Science Journal Classification (ASJC) codes

  • General Business,Management and Accounting
  • Strategy and Management
  • Management of Technology and Innovation


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