Pyramids

Abstract:     
Most corporate finance models of firm behavior study the typical US corporation: one firm with a large set of dispersed shareholders. In contrast, in many countries around the world, firms are often held in groups with complicated ownership structures. These groups, often referred to as pyramids, raise very distinct questions about firm behavior; these questions that are especially relevant for developing countries where these groups are most prevalent. In this paper, we first describe some empirical research we have performed on the nature of agency problems within pyramids. We then discuss a variety of questions, both theoretical and empirical, that remain to be unexplored.

Keywords: Pyramids, Corporate Governance, Development

JEL Classifications: J3

Working Paper Series