Complex ownership and capital structure

Teodora Paligorova () and Zhaoxia Xu

Journal of Corporate Finance, 2012, vol. 18, issue 4, 701-716

Abstract: This paper explores pyramidal firms and their motivations for the use of debt financing. We find that pyramids have significantly higher leverage than non-pyramids and that the use of debt in pyramids is associated with the risk of expropriation. We do not find evidence for the control-enhancing, disciplining, tax-reduction, and risk-sharing explanations for the use of debt financing. Our results indicate that the capital structure of pyramids is affected by the expropriation activities of ultimate owners that have excess control rights.

Keywords: Capital structure; Pyramids; Multiple shareholders (search for similar items in EconPapers)
JEL-codes: G31 G32 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (40)

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Working Paper: Complex Ownership and Capital Structure (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:18:y:2012:i:4:p:701-716

DOI: 10.1016/j.jcorpfin.2012.05.001

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