The Public Utility Pyramids

44 Pages Posted: 6 Oct 2010 Last revised: 8 Sep 2011

See all articles by Paul G. Mahoney

Paul G. Mahoney

University of Virginia School of Law

Date Written: August 1, 2011


In the 1920s and 1930s, many public utilities in the United States were controlled by holding companies organized in pyramid form. This structure can add value to subsidiaries but can also facilitate extraction of wealth from the subsidiaries’ public shareholders. I examine the effects of the Public Utility Holding Company Act of 1935 (PUHCA), which outlawed pyramid structures. The value of both top holding companies and their subsidiaries fall (rise) around the time of key legislative events suggesting a higher (lower) likelihood that PUHCA would be enacted, supporting the hypothesis that public shareholders benefited from the presence of a controlling shareholder.

Keywords: Corporate Structure, Pyramids, Concentrated Ownership, Public Utilities

Suggested Citation

Mahoney, Paul G., The Public Utility Pyramids (August 1, 2011). Virginia Law and Economics Research Paper No. 2010-09, Available at SSRN: or

Paul G. Mahoney (Contact Author)

University of Virginia School of Law ( email )

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