Business Group Affiliation and Financial Sustainability in the Capital-Intensive Logistics Industry: Evidence from Korea

In this study, we examine whether business group affiliation (BGA) enhances firm profitability and financial sustainability in the capital-intensive logistics industry, where stable captive demand and internal financing advantages coexist with potential agency costs. Using a longitudinal panel of 97 Korean logistics firms from 1996 to 2024 (1697 firm-year observations), the analysis identifies the affiliation effect from within-firm variation around affiliation transitions, with matching and dynamic-panel estimators as robustness checks. Affiliation raises return on assets (ROA) by 3.5 percentage points—approximately 0.28 standard deviations—shifting firms from near break-even performance in non-affiliated years to clearly positive profitability. This premium follows a delayed positive pattern: statistically insignificant during the first three years of affiliation, it only becomes significant from the mid-term onward and then persists without decline. Channel-level analyses indicate that the premium is concentrated in the financial channel—a reduction in the interest burden equivalent to 21–37% of the sample mean, consistent with internal capital market financing advantages—whereas operating profitability remains unchanged under Korea’s strict regulation of intragroup transactions. These findings indicate that persistent financing advantages within the group—reflected in a durably lower interest burden—rather than captive-market rents, underpin the financial sustainability of affiliated logistics firms, with implications for policymakers and corporate managers.