The Riddle of the Great Pyramids

The Oxford Handbook of Business Groups, Asli M. Colpan, Takashi Hikino, and James R. Lincoln, eds., September 2010

University of Alberta School of Business Research Paper No. 2013-239

Posted: 26 May 2013 Last revised: 4 Jun 2013

See all articles by Randall Morck

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: September 10, 2009

Abstract

Business groups inspire much confusion. To the Americans and British, capitalism forced brisk competition — maximizing efficiency. To everyone else, capitalism turned the economy over to a handful of old moneyed families. Neither side accorded the other much leeway: the Americans and Brits marveled at the conspiracy theories circulating in less enlightened parts of the world; the others marveled at the naivety of the Anglo-Saxons. Only recently has either side taken the other seriously. It turns out both are right, and capitalism is different in different countries. Remarkably, this stems largely — primarily, this article argues — from differences in corporate governance regarding pyramidal groups. Following most of the finance literature, this article defines a group as two or more listed firms under a common controlling shareholder. It says that the group is pyramidal if one listed group firm is a controlled subsidiary of another.

Keywords: business groups, capitalism, conspiracy theories, Anglo-Saxons, finance literature

Suggested Citation

Morck, Randall K., The Riddle of the Great Pyramids (September 10, 2009). The Oxford Handbook of Business Groups, Asli M. Colpan, Takashi Hikino, and James R. Lincoln, eds., September 2010; University of Alberta School of Business Research Paper No. 2013-239. Available at SSRN: https://ssrn.com/abstract=2269917

Randall K. Morck (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

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European Corporate Governence Institute ( email )

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Asian Bureau of Finance and Economic Research ( email )

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