The Corporate Pyramid Fable (Revised)

Abstract:     
Although corporate pyramids are currently commonplace world-wide and although there have been “noteworthy pyramiders” in American business history, this controversial form of corporate organization is now a rarity in the United States. The conventional wisdom is that corporate pyramids disappeared in the U.S. when New Deal policymakers began taxing dividends paid to corporate shareholders. This version of events is more fable than truth. The introduction of the intercorporate dividend tax did not foster a rapid dismantling of corporate pyramids. Instead, pyramidal arrangements were already rare in the U.S., other than in the utilities sector, and the demise of utility pyramids was prompted by the Public Utilities Holding Company Act of 1935 rather than tax reform.

This version should be referred to in preference to the version that appeared in print in the Business History Review, as this version incorporates a number of editorial changes not incorporated into the print version.

This is the revised and published version of an earlier working paper: http://ssrn.com/abstract=1544023.

Number of Pages in PDF File: 25

Keywords: Corporate Pyramids, Dividends, corporate Taxation, Holding Companies

JEL Classification: G30

Accepted Paper Series