Regulatory measures to dismantle pyramidal business groups: Evidence from the United States, Japan, Korea, and Israel

Assaf Hamdani, Konstantin Kosenko, Yishay Yafeh*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


Large business enterprises, from the railroad barons of nineteenth century America to Amazon and Google today, are often perceived as important for economic development and, at the same time, as potential threats to competition and even democracy. In this study, we compare the experiences of four countries that implemented policies to curb the influence of one type of large corporate entities – pyramidal business groups: The US in the 1930s; Japan during the American occupation (1945–1952); Korea following the Asian crisis (late 1990s); and Israel in the last decade (2010–2019). Novel regulatory measures, applied consistently in the US and Japan, where the extreme political circumstances were very favorable to economic reform, led to the demise of pyramidal business groups in these countries. Israel, where the reforms did not follow a severe crisis, also used specifically-designed regulatory tools over a decade-long period, resulting in a significant decline in the number and size of business groups. Korea, after experimenting with variety of regulatory measures, chose to rely primarily on corporate governance-focused reforms to curb the influence of the chaebol, but with limited effects; groups continue to dominate the Korean economy. Our findings point to the importance of specifically-designed regulatory tools, applied consistently over time, against the backdrop of a pro-reform political climate.

Original languageEnglish
Pages (from-to)221-261
Number of pages41
JournalJournal of Law, Finance, and Accounting
Issue number2
StatePublished - 8 Nov 2021


FundersFunder number
Bank of Israel
Krueger Center at the School of Business Administration of the Hebrew University


    • Business groups
    • Concentration of economic power
    • Controlling shareholders
    • Corporate governance
    • Pyramids


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