The Great Pyramids of America: A Revised History of US Business Groups, Corporate Ownership and Regulation, 1930-1950

Yishay Yafeh, Eugene Kandel and ,
Authors registered in the RePEc Author Service: Randall Morck and Konstantin Kosenko

No 9759, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Most listed firms are freestanding in the U.S, while listed firms in other countries often belong to business groups: lasting structures in which listed firms control other listed firms. Hand-collected historical data illuminate how the present ownership structure of the United States arose: (1) Until the mid-20th century, US corporate ownership was unexceptional: large pyramidal groups dominated many industries; (2) About half of these resembled groups elsewhere today in being industrially diversified and family controlled; but the others were tightly focused and had widely held apex firms; (3) US business groups disappeared gradually, primarily in the 1940s, and by 1950 were largely gone; Their demise took place against growing concerns that they posed a threat to competition and even to society; (4) We establish a link between the disappearance of business groups and reforms that targeted them explicitly ? the Public Utility Holding Company Act (1935) and rising intercorporate dividend taxation (after 1935), or indirectly ? enhanced investor protection (after 1934), the Investment Company Act (1940) and escalating estate taxes. Banking reforms and rejuvenated antitrust enforcement may have indirectly contributed as well. These reforms, sustained in a lasting anti-big business climate, promoted the dissolution of existing groups and discouraged the formation of new ones. Thus, a multi-pronged reform agenda, sustained by a supportive political climate, created an economy of freestanding firms.

Keywords: Corporate groups; Corporate ownership; Us financial history; New deal (search for similar items in EconPapers)
JEL-codes: G3 G34 G38 N22 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-cfn, nep-his and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP9759 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: The Great Pyramids of America: A Revised History of US Business Groups, Corporate Ownership and Regulation, 1930-1950 (2013)
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:cpr:ceprdp:9759

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9759

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().