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Ownership and Control: Dissecting the Pyramid

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Author Info
Ariane Chapelle () (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels)
Ariane Szafarz () (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles)

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Abstract

Pyramids, cross-ownership, rings and other complex features are frequent in the European and Japanese industrial world. The dissection of these structures requires a proper measurement of indirect shareholdings. While some authors use the (generally overestimated) data coming from legal ownership declarations, Ellerman (1991) and Flath (1992), Baldone et al. (1997) use the input-output matrix technology applied to raw ownership data. This paper goes a step further by adding control considerations based on the majority voting rule. The analysis moves from integrated ownership towards integrated control (including chain effects), then defines a control ratio for ultimate shareholders of any firm. The methodology is illustrated on Albert Frère's pyramidal empire. By offering a way to evaluate control leverages, this paper provides a useful tool for empirical research in corporate governance.

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File URL: http://www.solvay.edu/EN/Research/Bernheim/documents/wp03002.pdf
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File Function: First version, 2002
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Publisher Info
Paper provided by Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB) in its series Working Papers CEB with number 03-002.RS.

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Length: 22 pages
Date of creation: Dec 2002
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Handle: RePEc:sol:wpaper:03-002

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Related research
Keywords: Integrated ownership Corporate control Corporate governance.

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Find related papers by JEL classification:
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation

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  1. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. French, Kenneth R. & Poterba, James M., 1991. "Were Japanese stock prices too high?," Journal of Financial Economics, Elsevier, vol. 29(2), pages 337-363, October. [Downloadable!] (restricted)
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  3. Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, vol. 48(3), pages 831-80, July. [Downloadable!] (restricted)
  4. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112. [Downloadable!] (restricted)
  5. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-83, June. [Downloadable!] (restricted)
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  6. Flath, David, 1992. "Indirect shareholding within Japan's business groups," Economics Letters, Elsevier, vol. 38(2), pages 223-227, February. [Downloadable!] (restricted)
  7. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, 04. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Thibault Biebuyck & Ariane Chapelle & Ariane Szafarz, 2002. "Les leviers de contrôle des actionnaires majoritaires," Working Papers CEB 03-001.RS, Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB). [Downloadable!]
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  2. Carlos Pombo & Luis H Gutierrez & Rodrigo Taborda, 2005. "Ownership and Control in Colombian Corporations," BORRADORES DE INVESTIGACIÓN 003311, UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA. [Downloadable!]
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