Corporate group

About: Corporate group is a research topic. Over the lifetime, 1747 publications have been published within this topic receiving 46868 citations.

Family Business Groups Around the World: Costs and Benefits of Pyramids

Abstract: Using a comprehensive dataset of 28,039 firms in 45 countries, this study investigates the motivations for family-controlled business groups, focusing on the question of how such groups are able to attract minority shareholders and allay their concerns about being expropriated. We argue that minority shareholders co-invest with group controlling owners because group structures play critical roles in financing projects that might not be otherwise funded by external investments, especially in underdeveloped capital markets. Our analysis offers support for this argument and provides new insight into how the balance of costs and benefits of group affiliation varies both within the pyramidal structure of a group and across investment environments. At the country level, we find that restricted access to external capital is associated with a greater prevalence of family business groups. Within individual groups, we find evidence consistent with funding advantages that pyramid structures offer: among group members, firms at the bottom of a pyramid receive the greatest internal capital support. In particular, internal equity funding, investment intensity, and firm performance all increase down a pyramidal chain. Comparing group affiliates and independent firms, we find that the former is associated with a valuation discount, which is consistent with evidence from prior studies. However, controlling for endogeneity in group affiliation shows that certain firm types benefit from business group membership. Overall, our results highlight that in addition to the well-documented control motivations behind pyramidal groups, these structures also provide important funding and certification support to members firms.

A Lost Decade for Japanese Corporate Governance Reform?: What’s Changed, What Hasn’t, and Why

Abstract: Analysis of Japanese corporate law reveals a striking amount of formal institutional change in the past ten years, occurring at an ever-accelerating pace. This feature of law reform can be traced to a heightened awareness of the organizational straightjacket imposed on Japanese firms by the Commercial Code, and to a more competitive and market-responsive environment for the production of corporate law. It has been a "sea change decade" for Japanese corporate law. Yet it has been an ambiguous decade for Japanese corporate practices. Signs of change in response to the new institutional environment can be found in the areas of shareholder activism, corporate mergers and acquisitions and other organizational changes, board structure, and corporate finance. At the same time, however, domestic institutional investors remain passive, management remains largely insulated from the market for corporate control, and "lifetime" employment practices, while covering a shrinking subset of the Japanese workforce, remain firmly in place. This paper accounts for the observed pattern of change and non-change by analyzing the political economy of corporate law reform, the complementarities at work between corporate law and other institutions, and the relationship between corporate law and corporate governance. Japanese corporate law has become more adaptable and responsive to "demand-side" impulses, but it also increasingly reflects the interests of Japanese management, an organized group potentially threatened by corporate law reform. Without external pressures, Japanese managers are able to use the newfound flexibility of the corporate law to entrench themselves as well as to improve returns to shareholders. Moreover, while the corporate law has improved, several complementary institutions needed to complete the institutional package are still incomplete. Ultimately, corporate law bears only a limited relationship to corporate governance. Changes in corporate practices are brought about by dynamics external to the formal corporate governance institutions. Thus, the sea change in Japanese corporate governance must await further changes in the distribution of shareholders, in the capital markets, and in the incentive structures for management, and the further erosion of corporate norms that promote employee and managerial interests over shareholder interests.

Piercing the Corporate Veil

Abstract: When courts 'pierce the corporate veil', they disregard the separateness of the corporation and hold a shareholder responsible for the corporation's action as if it were the shareholder's own. Although as a general rule the courts are reluctant to allow corporate veil piercing, creditors of an insolvent corporation frequently attempt to hold the shareholders liable when they cannot obtain satisfaction from their debtor. In the United States, in fact, piercing claims constitute the single most litigated area in corporate law.This study clears up some of the mists hanging around the concept of corporate veil piercing. What exactly is corporate veil piercing and in which situations does it occur? What are the legal rules involved? Following a short overview of the applicable law in the six legal systems that are the subject of this study-those of Belgium, the Netherlands, France, Germany, the United Kingdom, and the United States-the author proceeds with a more profound analysis from a functional comparative perspective, starting from particular situations that typically call for shareholder liability for the debts of subsidiary companies.Among the grounds for veil piercing claims the author discusses the following, along with the substantive and procedural law and important cases associated with each in the six jurisdictions covered: undercapitalization; asset stripping; undue continuing of loss-making activities; and dentification or the consideration of the corporate group as an economic unit. In the course of the presentation, a thorough analysis of legal scholarship in the area leads to numerous applications of the various theories and doctrines that can be brought to bear on veil piercing cases. In addition, an in-depth discussion of the international dimension of corporate veil piercing focuses on the question of which laws should govern the liability of a parent corporation for the debts of its subsidiary. Throughout, the author's clear insight into the substantive law of veil piercing sheds light on traditional misconceptions in the conflict of laws on the issue.She also details initiatives undertaken by various international bodies, including the United Nations, the Organization for Economic Cooperation and Development, the European Union, the International Court of Justice, and the International Labour Organization.Dr Vandekerckhove's study is the most comprehensive, far-reaching, and up-to-date study of this important growing area of corporate law practice. As such it will prove of great value to practitioners, judges, and academics in the field, and will prove its worth anywhere in the world where the presence of multinational corporations is felt.

Business Group Affiliation and Firm Search Behaviour in India: Responsiveness and Focus of Attention

Abstract: This paper investigates the effects of organizational form on problemistic search. We contrast how Indian firms affiliated to business groups and unaffiliated firms evaluate performance and react by adjusting their internal technology search and external market search. We propose that, compared with unaffiliated firms, business group firms are more externally oriented in setting aspiration levels and more likely to respond to low performance in the market domain. We find support for an external orientation of business group affiliated firms and find that group affiliation determines the responsiveness to performance feedback in different search domains. The findings suggest a need to add considerations of organizational form and governance to the theory of organizational search.