Business Groups in Canada: Their Rise and Fall, and Rise and Fall Again

54 Pages Posted: 23 Oct 2015

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

Gloria Yuan Tian

University of Lethbridge Calgary Campus; Financial Research Network (FIRN)

Multiple version iconThere are 3 versions of this paper

Date Written: September 21, 2015

Abstract

Family-controlled pyramidal business groups were important in Canada early in the 20th century, amid rapid catch-up industrialization, but largely gave way to widely held freestanding firms by mid-century. In the 1970s and early 1980s – an era of high inflation, financial reversal, unprecedented state intervention, and explicit emulation of continental European institutions – pyramidal groups abruptly regained prominence. The largest of these were politically well-connected and highly leveraged. The two largest collapsed in the early 1990s in a recession characterized by very high real interest rates. The smaller groups that survived were more vertically integrated and less diversified at the time. Widely held freestanding firms and Anglo-Saxon concepts of the role of the state soon regained predominance.

Keywords: Pyramidal Business Groups, Financial History, Corporate Ownership and Control

JEL Classification: G3, L22, N22

Suggested Citation

Morck, Randall K. and Tian, Gloria Yuan, Business Groups in Canada: Their Rise and Fall, and Rise and Fall Again (September 21, 2015). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 455/2015. Available at SSRN: https://ssrn.com/abstract=2677142 or http://dx.doi.org/10.2139/ssrn.2677142

Randall K. Morck (Contact Author)

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

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Gloria Yuan Tian

University of Lethbridge Calgary Campus ( email )

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Financial Research Network (FIRN)

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