The Corporate Pyramid Fable (Revised)

25 Pages Posted: 18 Jan 2011 Last revised: 23 Jan 2011

See all articles by Steven A. Bank

Steven A. Bank

University of California, Los Angeles (UCLA) - School of Law

Brian R. Cheffins

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: December 20, 2010


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:

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

JEL Classification: G30

Suggested Citation

Bank, Steven A. and Cheffins, Brian R., The Corporate Pyramid Fable (Revised) (December 20, 2010). Business History Review, Vol. 84, No. 3, pp. 435-58, 2010, University of Cambridge Faculty of Law Research Paper No. 11/04, UCLA School of Law, Law-Econ Research Paper No. 11-02, Available at SSRN:

Steven A. Bank (Contact Author)

University of California, Los Angeles (UCLA) - School of Law ( email )

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Brian R. Cheffins

University of Cambridge - Faculty of Law ( email )

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European Corporate Governance Institute (ECGI)

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