Complex ownership and capital structure

Teodora Paligorova, Zhaoxia Xu

Research output: Contribution to journalArticlepeer-review


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.

Original languageEnglish (US)
Pages (from-to)701-716
Number of pages16
JournalJournal of Corporate Finance
Issue number4
StatePublished - Sep 2012


  • Capital structure
  • Multiple shareholders
  • Pyramids

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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