Optimum Structure of Corporate Groups

Stylianos Artsidakis, Yiannis Thalassinos, Theofanis Petropoulos and Konstantinos Liapis
Additional contact information
Stylianos Artsidakis: Department of Economic and Regional Development, Panteion University, Syngrou Av. 176-71, 17671 Athens, Greece
Yiannis Thalassinos: Department of Economics and Finance, Gulf University for Science and Technology, Hawally 32093, Kuwait
Theofanis Petropoulos: Department of Economic and Regional Development, Panteion University, Syngrou Av. 176-71, 17671 Athens, Greece

JRFM, 2022, vol. 15, issue 2, 1-16

Abstract: Corporate groups consist of a set of companies, often described as subsidiaries, which are usually controlled by one single entity, the parent or holding company. The term control means the parent company’s rights to direct the relevant activities of other companies. A parent company can control a subsidiary either directly or indirectly through its voting power. Groups’ structure can be very complex usually with multiple crossholding and loop participations driving to not observable sharing rights. The aim of this paper is to examine how the parent company of a group with given participation rates can increase its capital by changing the share structure of the group and maintain management control over the group while the least capital comes from the majority. Furthermore, using evolver software we derive to the new optimal structure of the group and the maximum parent’s cash inflow from shares exchange. The value of this research to show the possibility for a parent company to create additional capital, by maximizing the minority interest, and at the same time direct voting rights in its favor.

Keywords: group of companies; direct and indirect control; voting rights; ownership structure; equity; majority; non-controlling interest; capital (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.mdpi.com/1911-8074/15/2/88/pdf (application/pdf)
https://www.mdpi.com/1911-8074/15/2/88/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:15:y:2022:i:2:p:88-:d:752689

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().