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This paper aims to show that the business group – i.e. the set of firms under common ownership and control – is the most appropriate unit to study the behavior and organization of firms and define their boundaries. Particular emphasis is given to notions such as unitary direction – i.e. the influence over strategic decisions – and administrative co‐ordination which allow owners to exercise supervision and authority over the controlled companies.

Given these aims the paper adopts an interdisciplinary perspective that relies on economics, management and law. This multidisciplinary approach is necessary for analyzing the different aspects characterizing business groups in terms of ownership, control, economic synergies between firms and internal organizational mechanisms. To support the propositions, data and information from various sources are used, ranging from official statistics on the firm's population, to sample surveys, case studies and juridical evidence. The use of different sources is justified not only by the interdisciplinary nature of the problem but also by the lack of systematic statistical evidence on the phenomenon of business groups.

The authors suggest that when a company is part of a group, the business group rather than the individual company is the most appropriate “unit” for analyzing the organization and behavior of firms. This does not deny that in some cases it can be worthwhile using the legal boundary as the appropriate unit; however, most of the empirical analyses about firms consider the legal boundary without considering whether companies are independent or part of a business group.

The authors show that forms of unitary direction and administrative co‐ordination are common in business groups; these forms can be assimilated to the internal organization of firms. For this reason they propose that the group rather than the individual company is the appropriate unit to delimit the boundary of the firm. In this sense, their main conclusion is that not considering the business group underestimates the actual firm boundaries.

Business groups often contain banks or near banks that can protect group firms from economic shocks. A group bank subordinate to other group firms can become an “organ bank” that selflessly bails out distressed group firms and anticipates a government bailout. A group bank subordinating other group firms can extend loans to suppress their risk taking to default risk, preserving risk-averse low-productivity zombie firms. Actual business groups can fall between these polar cases. Subordinated group banks magnify risk taking; subordinating group banks suppress risk taking; yet both distortions promote business group firms’ survival. Limiting intragroup income and risk shifting, severing banks from business groups, articulating Business Group Law, or dismantling business groups may mitigate both distortions but also limits business groups’ internal markets, which are thought to be important where external markets work poorly.

The purpose of this paper is to report on the study of the two acquisitions of Telecom Italia carried out by Olivetti and Pirelli in the last decade, to evaluate how changes in ownership structure and corporate governance affected minority protection.

The paper presents an analysis of how Olivetti's and Pirelli's takeovers were achieved. Then the authors contrast the two operations with regards to extraction of private benefits and expropriation of minorities' wealth.

Shows that, in the case of Telecom Italia, the implementation of pyramids is connected with the existence of large private benefits, and that the acquisitions resulted in the substantial expropriation of minority shareholders.

The analysis is referred to a very unique case. While a lot can be learnt from this approach, generalisations are not trivial.

The conclusion is that groups owning several listed companies deserve a special discipline, as many are the policy implications of their presence in financial markets.

Proposes an ad hoc methodology to consider companies from the top to the bottom of the pyramid chain, and to put in a common framework the non‐simultaneous operations linked by a common strategic goal, namely an acquisition. Further, a set of governance lessons is provided.

Although tax-motivated income shifting has been widely explored, no studies have as yet analyzed the association between ownership structure and management decisions about income shifting. The ownership structure of multinational groups is characterized by different levels of minority interests, and our aim is to establish whether income shifting is explained by the aim of expropriation of minorities, as well as taxation avoidance.

We collect data on a sample of European parent companies located in five countries and their foreign subsidiaries, and run a multivariate regression based on the Huizinga and Laeven (2008) model.

Our results support the idea of minority expropriation, finding evidence of ownership-motivated income shifting. We also find that the level of minority protection affects ownership-motivated income shifting, and that, when both are present, expropriation is statistically significant.

Although the study looks at a wide range of subsidiaries, a limitation may be that it examines only firms having parent companies in five European countries. Further research would overcome this limitation and extend the literature and take into account other income-shifting contextual variables. Our results may lead regulators to pay more attention to the protection of minority interests.

This research offers insights to companies and investors, and should help them to make better-informed decisions and evaluate the best contexts for investments.

This study enriches the literature on income shifting by revealing that it can be caused by factors other than the desire to avoid taxation. It suggests that ownership structure is crucial.

Purpose – This chapter aims to identify and address methodological issues inherent in business group studies, especially within the context of South Korean chaebols, many of which have been exalted as most remarkable cases of business groups.

Design/Methodology/Approach – After reviewing the theoretical background and the evolution of chaebols, the authors identify methodological issues focusing on the constructs of major interest to researchers, which need careful treatment for enhancing the internal and external validity of studies on business groups in general and chaebols in particular.

Findings – Any sample of business groups must be composed based on accurate definitions rather than conventional lists readily available, in accordance with the research purpose. Identifying and quantifying the strategic and structural characteristics of business groups should be accompanied by an understanding of the various types of economic organizations. The uniqueness of business groups in each country should also be considered, especially in conducting comparative analyses and generalizing research findings. Measuring performance needs more careful attention given the increasing complexity in many business groups. The embeddedness of business groups in a specific society as well as their coevolution with the institutional context urges researchers to employ more qualitative or ethnographic methods.

Originality/Value – The authors suggest alternatives through which we can cope with the methodological issues, and make suggestions for future research. As business groups continue to play a significant role in many emerging economies, continuing efforts to elaborate methods will contribute to improving the value of our scholarly work in both academic and practical dimensions.

The purpose of this study is to provide evidence for how business group firms transfer financial resources among affiliated firms by examining the differences in the level of debt financing and the choices of new equity financing between group affiliated and non‐affiliated firms in an emerging market, Turkey. The role of affiliated banks for internal capital market transactions is also to be examined.

Univarite analysis and simple pooled OLS regression analysis are performed to examine the role of group affiliation on the level of several debt financing measures. Additionally, a Logit regression analysis is used to analyze the behavior of affiliated firms in their equity financing decisions by issuing new shares.

Group affiliated firms transfer funds in the group by using transactions such as trade debt, and issuing cash rights and bonus shares. The affiliated firms – especially with a bank in the group – support their higher growth with new equity issues in the forms of cash rights and bonus shares along with higher trade debt. Moreover, non‐affiliated firms utilize a higher percentage of debt to shareholders, while affiliated firms without a bank utilize a higher financial debt. These findings are consistent with the idea that the role of the group bank is very important in financing choices of affiliated firms.

This paper provides direct measures of external and internal funds by focusing on new equity issues and debt structure, which can be applied in different economic environments, rather than using indirect measures or not readily available datasets such as connected party transactions.

The paper provides additional evidence to assess the efficiency of the use of internal capital markets. Moreover, the role of group affiliated banks among affiliated firms has not yet been extensively addressed in the literature and an examination of this issue leads to a better understanding of their roles in diversified business groups.

The Chinese economy, among other developing economies in Asia, has experienced extraordinary growth in the last decade. Yet, for China and other newly emerging economies in Asia to grow in a sustainable manner, good corporate governance and management mechanisms must be in place. The authors aim to explore this issue in this paper. The authors also aim to particularly point out that Japan's experience both before after the Second World War will be relevant as a model for China's public and business development policy decision‐making.

The authors apply well‐established theories of economic development and organizational structures of business organizations to Japan's experience before and after the Second World War and then to contemporary China's experience. The analysis of Japan uses the substantial research findings on the development of that country available in the business history literature.

The paper's analysis shows multiple ways in which China and other emerging East Asian economies can take advantage of Japan's experience (which is called the Japan model here) for their own development policies and achieve sustainable growth in the long run. For example, it is expected that Japan's experiences may be relevant in areas such as: firm formation and the utility of business groups of various types; development of industrial relations and employment practices; interactions between business and government in the promotion of economic development; and how these factors relate to technology advances on a worldwide basis.

The findings reported in this paper also contribute marginally to the literature by considering the recent experience of Chinese private and state‐owned corporations, including international joint ventures, in the context of Japan's experience in its economic and business development history.

The purpose of this paper is to explain how current security market regulations in Japan have evolved following Japan’s corporate governance reforms, which began in the 1990s after the bursting of a massive financial bubble. As part of the reform, Japan aimed to introduce US-style corporate governance mechanisms.

This paper first explains the process behind Japan’s corporate governance reforms using the theory of selective adaptation. By doing so, the various changes that have taken place in the regulations of security markets are also explained. The paper concludes with a discussion of the limitations of transplanting US-style corporate governance mechanisms in Japan and the implications for the functioning of Japan’s security markets.

While applying a selective adaptation framework to Japan’s efforts to transplant US-style corporate governance mechanisms to its own markets, the author found that certain Japan-specific business practices, such as its heavy reliance on keiretsu corporate groupings, may interfere with the market-based business practices and free competition which characterize the US system. This in turn places limitations on the functioning of US-style security markets in Japan.

This paper explains the limitations of government regulation on security markets in Japan, which may be of interest to both public and private sector analysts. This paper focusses on Japan’s experience of transplanting US-style corporate governance mechanisms to Japan. The author expect that Japan’s experience will be of much interest to China, South Korea and other countries in East Asia, where pyramidal and other types of business groups play important roles in their economies.

The purpose of this paper is to explore the effects of appointing foreign directors on the foreign acquired Turkish banks. Based on the developments in the Turkish banking system and the distinctive features of the Turkish market, the authors examine the appointment of foreign directors in three different levels: as a CEO, chairman and board member. The authors analyse how the appointments of foreign directors in each of these three levels affects the profitability and strategies of foreign acquired banks.

The authors use the difference-in-difference (DID) model where the authors compare two groups: foreign acquired banks vs domestic banks for a five-year period. By applying the DID model, the authors aim to remove the time invariant individual characteristics of the banks that could be due to the permanent differences between the two groups, as well as biases from comparisons over time that could be due to trends.

The authors find that the presence of the foreign chairman has a positive effect on the profitability of the foreign acquired bank and on the improvement of the income generated from interest activities, indicating that foreign chairman improves the monitoring of board of directors and brings new skills and experiences. Furthermore, foreign acquired banks are associated with an increase in the income generated from non-interest activities in the fifth year following their acquisitions, showing the introduction of new strategies. The change of the foreign acquired bank’s strategies in the fifth year after acquisition also suggests that it takes time to implement new strategies in a new environment.

Though the effects of foreign board membership on bank’s performance have been previously discussed in literature, this study differentiates in that it distinguishes among different positions, e.g. chairman or CEO when examining the effect of a foreign director on a foreign acquired bank’s performance. In addition, the use of foreign acquired Turkish banks in the sample in this context adds to the general academic literature.

Purpose – The objective of the present study was to determine the effect of monosodium glutamate (MSG) administration to pyramidal cells necrosis on the cerebral cortex of Wistar male rats (Rattus norvegicus).

Design/Methodology/Approach – This research was a laboratory quasi-experiment study with post-test control group design on 24 male Wistar rats (Rattus norvegicus) aged 8-10 weeks, weighted 200 ± 10 gr, divided into 4 groups (GI or control group, GII treated with MSG dose 6 mg/grbb/day, GIII 12 mg/grbb/day, and GIV 24 mg/grbb/day) for 21 days consecutively. Pyramidal cells observed in 10 field of view. The Kruskal-Wallis test and Mann Whitney tests were used to analyze the data.

Findings – There were significant differences between pyramidal cells necrosis numbers between control and the treatment groups. MSG doses 6, 12, and 24 mg/grbb/day developed the pyramidal cells necrosis in the cerebral cortex (p < 0,005).