Pyramid Business Groups in East Asia: Insurance or Tunneling?

Seki Obata, 績小幡 and セキオバタ

No 2002-13, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: A business group with a pyramid ownership structure is a prevalent form in developing countries. I show that the propping up function of pyramid groups exists only in countries without good investor protection where minority shareholders could be expropriated with low cost. A pyramid business group is not insurance mechanism for all group firms. My predictions are supported by the data on East Asian firms in 1990s. Additionally, I find that the pyramid ownership does not affect the valuation of non-distressed firms. This might be the reason that the outsider invested in the group bottom firms before the Asian Crisis.

Keywords: Pyramid ownership; Business group; Tunneling; Investor Protection (search for similar items in EconPapers)
JEL-codes: G32 L22 O16 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2003-03
Note: First draft: April 2001; This version: March 2003
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2002-13

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