The Corporate Pyramid Fable (Revised)
Business History Review, Vol. 84, No. 3, pp. 435-58, 2010
25 Pages Posted: 18 Jan 2011 Last revised: 23 Jan 2011
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: http://ssrn.com/abstract=1544023.
Keywords: Corporate Pyramids, Dividends, corporate Taxation, Holding Companies
JEL Classification: G30
Suggested Citation: Suggested Citation