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date: 22 September 2020

Abstract and Keywords

Business groups of various forms and types have existed in Israel almost constantly since its independence. This article begins with a brief summary of the relevant institutional and economic characteristics of Israel, and proceeds to provide a broad historical overview of Israel's business groups, focusing primarily on forces that facilitated their growth, and on the evolution of privately owned business groups in parallel to the demise of government-controlled ones. It also discusses the privatization and ownership changes since 1990 and the evolution of Israel's business elite. Furthermore, it presents a detailed picture of the major business groups in Israel, their economic activity, ownership and control structure, and performance using panel data on 650 public companies from 1995 to 2005. It defines a business group as a group where at least three public companies are controlled by the same (ultimate) shareholder.

Keywords: business groups, Israel's business elite, economic activity, ownership, control structure

Konstantin Kosenko

Konstantin Kosenko is Economist in the Research Department of the Bank of Israel, Israel. His research interests include corporate governance, corporate finance, financial intermediation, and the role of information in financial markets. He has written several articles on the financial system in Israel, including a paper on conflicts of interest in analyst recommendations that resulted in regulatory changes. His current research focuses on the evolution, performance, and economic impact of business groups in Israel.

Yishay Yafeh

Yishay Yafeh is Associate Professor at the School of Business Administration, The Hebrew University, Israel, and Research Fellow at Centre of Economic Policy Research (CEPR) and the European Corporate Governance Institute (ECGI). He is co-author (with Paolo Mauro and Nathan Sussman) of Emerging Markets and Financial Globalization: Sovereign Bond Spreads in 1870-1913 and Today (Oxford University Press, 2006). He has published in many journals, including Journal of Finance, Quarterly Journal of Economics, Economic Journal, Joural of Business, and Journal of Industrial Economics.

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