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Chapter 48: Some Aspects of Corporate Pyramiding

Pyramiding in corporate finance is the creation of a speculative capital structure by means of a holding company or a series of holdings companies. Usually the predominant purpose of such an arrangement is to enable the organizers to control a large business with the investment of little or no capital and also to secure to themselves the major part of its surplus profits and increased going-concern value.

·         The possession of control of companies by those who have no real capital investment (or relatively minor one) is inequitable and makes for irresponsible and unsound managerial policies.

·         Not all holdings companies are created for this purpose and each has to be analyzed on its own merits.

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