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Pro‐market reforms and allocation of capital in India

Pro‐market reforms and allocation of capital in India Purpose – The purpose of this paper is to study the efficiency of capital allocation, across levels of ownership, in the aftermath of pro‐market reforms in India. Design/methodology/approach – The paper measures investment efficiency using the accelerator principle and examines the effect of ownership type on capital allocation. Findings – No significant improvement in capital allocation during the period studied is found. The findings suggest firms face significant costs in adjusting their capital stock. Originality/value – The paper uses unique data to estimate the elasticity of capital with respect to output. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economic Policy Emerald Publishing

Pro‐market reforms and allocation of capital in India

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1757-6385
DOI
10.1108/17576381111133606
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to study the efficiency of capital allocation, across levels of ownership, in the aftermath of pro‐market reforms in India. Design/methodology/approach – The paper measures investment efficiency using the accelerator principle and examines the effect of ownership type on capital allocation. Findings – No significant improvement in capital allocation during the period studied is found. The findings suggest firms face significant costs in adjusting their capital stock. Originality/value – The paper uses unique data to estimate the elasticity of capital with respect to output.

Journal

Journal of Financial Economic PolicyEmerald Publishing

Published: May 31, 2011

Keywords: Capital; Cost allocation; Economic reform; Corporate ownership; India

References