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The Evolution of Ownership Structures: Privatization, Business Groups, and Pyramids

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  • Felipe González
  • Felipe Aldunate
  • Mounu Prem
  • Francisco Urzúa

Abstract

What is the contribution of privatization to the formation of business groups and pyramids? We use new data to study how Pinochet’s privatizations in Chile (1973-1990) affected the evolution of ownership structures. Using non-privatized firms in the same industry as comparison, and accounting for pre-privatization characteristics, we find that privatized firms were more likely to become part of business groups, began to act as providers of credit within groups, and pyramidal ownership structures were built on top of them. As most privatized firms became part of new (instead of traditional) business groups we argue that this privatization reform facilitated the renovation of elites and contributed to the formation of contemporaneous business groups.

Suggested Citation

  • Felipe González & Felipe Aldunate & Mounu Prem & Francisco Urzúa, 2019. "The Evolution of Ownership Structures: Privatization, Business Groups, and Pyramids," Documentos de Trabajo 523, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:523
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