Control can be maintained over firms with a variety of
corporatestructuresincludingpyramidsandcrossholdings.In
apyramidstructure,aninvestorusescontrolinonecompany
to establish control in other companies. For instance,
companyXcanown 50 percentofcompanyYandusethe
assetsof companyYto buy 50 percent ofcompany Z. In
effect, theinvestor who controls company X will end up
controllingcompaniesYandZ,aswell.Studiesindicatethat
pyramidsareacommonapproachtoconsolidatingcontrolin
family-run companies in Asia and Europe.
21 Inacrossholdingstructure,companiesownsharesineach
other,thusallowingthegroup’scontrollingstockholdersto
run all ofthe companies with less than 50 percent of the
outstanding stock.
22 ThevastmajorityofJapanesecompanies(keiretsus)and
Koreancompanies(chaebols)inthe1990swerestructuredas
crossholdings,immunizingmanagementatthesecompanies
from stockholder pressure.
Large Shareholder/Managers
In some firms, the presence of a large stockholder as a
managerisasignificantimpedimenttoahostileacquisitionor
amanagementchange.ConsiderafirmlikeOracle,wherethe
founder/CEO,LarryEllison,ownsalmost 30 percentofthe
outstandingstock.Evenwithoutadispersionofvotingrights,
hecaneffectivelystymiehostileacquirers.Whywouldsucha
stockholder/managermismanageafirmwhenitcostshimor
herasignificantportionofmarketvalue?Thefirstreasoncan
betracedtohubrisandego.Founder/CEOswithlittletofear
fromoutsideinvestorstendtocentralizepowerandcanmake
serious mistakes. Thesecond is that what is good for the
insidestockholder, whooften has allof his orher wealth