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date: 22 May 2019

Abstract and Keywords

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

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