Abstract
ABSTRACT This paper examines how the shareholding proportion of large shareholders affects the horizontal organizational structure of business groups. We empirically find that as the shareholding proportion of large shareholders increases, the number of subsidiaries decreases, which provides evidence of the alignment effect and risk aversion of large shareholders. Our results are robust to various robustness tests. The mechanism tests further verify the alignment effect and risk aversion of large shareholders, showing that as ownership becomes more concentrated, large shareholders tend to reduce agency problems and avoid risks. This study enhances the understanding of horizontal expansion in pyramidal organizational structures.
Published Version
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