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Control in Pyramidal Structures

Author

Listed:
  • Marc Levy

Abstract

Today, the shareholding structure of companies is sometimes so complex that it can be difficult to find back their actual owners and controllers. In particular, in continental Europe and in Asia, control tunnelling appears frequently through pyramidal structure. After describing the ownership structure through a graph association, this paper analyses the voting game at stake in the race for control. It compares existing methods and algorithms to identify the owners and controllers of a firm in a pyramidal structure without cross-ownership. As a real life example, the case of the Belgian retail company, Colruyt, is used to apply these different methods and compare their results. Furthermore, it shows how the ownership structure allows to the Colruyt family to keep the control of Colruyt even if there are discordances inside the family.

Suggested Citation

  • Marc Levy, 2006. "Control in Pyramidal Structures," Working Papers CEB 06-023.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:06-023
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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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