This study analyzes ownership and directorship links among larger Canadian-owned corporations. These links have received insufficient attention from Canadian economists. It shows that these corporations did not undergo the radical changes predicted for their counterparts in other countries: proprietor ownership remains high, and the board of directors persists as the centre of power. / Ownership links form the basis for the development and empirical investigation of the "Shadow Group" concept. The taxonomical classification of shadow groups reveals complex structures accompanying diversification strategies. Interlocking directorships exist among "core" corporations inside the groups and are frequent between the shadow groups and the rest of the economy. / Shadow groups were at the heart of mergers and acquisitions between 1978 and 1981. A case study shows that external growth (especially takeovers) is their characteristic tactic for expansion. Hence, the necessity exists for amending economic theories to account for the behaviour of these groups.

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This study investigates the potential role of ownership structure as a determinant of the corporate dividend policy. A firm's dividend policy is modelled as the outcome of a voting game among groups of asymmetrically informed shareholders, who also have different marginal tax rates for dividend income. The outcome of the voting game is determined by the relative voting powers of these shareholder groups. Voting power is denned as the probability that a particular block of shares will be pivotal in determining the outcome of the voting game. Using Shapley values as instruments for shareholder groups' voting powers, data on firms which traded on the Toronto Stock Exchange during the 1976-88 period are employed to test the model's predictions. / Business, Sauder School of / Graduate

The objective of this thesis is to examine the traditional structure-conduct-performance (SCP) paradigm as it applies to current Canadian merger policy and to Canadian merger activity during the period January 1964 to December 1983. The SCP paradigm postulates that with increasing industry concentration there will be increased incentives for firms within the industry to engage in anti-competitive, collusive behavior. Since successful collusion increases product prices, the SCP paradigm implies that horizontal mergers, which by definition increase concentration, will generate increased industry-wide profits. Thus, horizontal mergers should benefit not only the merger participants, but also the product market rivals of the merging firms. This hypothesis is examined using a sample of Canadian horizontal mergers in oil and gas, mining and manufacturing industries and a "control" sample of non-horizontal mergers taking place in the same industries. The results do not support the collusion hypothesis postulated by the SCP paradigm but are consistent with the theory that Canadian mergers are motivated by perceived economic efficiencies. / Business, Sauder School of / Graduate

A number of studies demonstrated a positive relationship between market power and firm profitability. Economic theory demonstrates that these high profits imply higher prices and restricted output and consequently inefficient resurce allocation. Financial leverage, however, could be a possible alternative explanation for these profits. Market power may increase the ability of firms to support low cost debt capital and therefore the higher observed profitability could also be the result of greater financial leverage. This study then attempted to find empirical evidence to support the hypothesis that there is no significant difference between the financial structures of powerful firms and other less powerful firms. Leverage should increase risk because it represents a fixed obligation to the firm. The method of study employed is the application of analysis of variance and regression analysis to a cross-sectional sample of Canadian industry during the period 1962 to 1969. This study represents a first attempt to apply a finance model viz. CAPM to a problem in industrial organization, viz.concentration. The results indicate that powerful firms have relatively lower debt than other less powerful firms, thus rejecting the hypothesis. As a result of lower debt, powerful firms incur lower risk. The firm with market power apparently prefer low risk and a conservative capital structure. / Business, Sauder School of / Graduate

The purpose of this study is to survey the theory and practice of corporate liquid assets. A survey of the pertinent literature will be made to determine the theory concerned with the management of corporate liquid assets. The practice of the management of corporate liquid assets is examined at two levels. The first is a historical review of empirical data of Canadian corporations. The data used is aggregate in nature with corporations grouped into eleven industrial classes and ten asset size categories. With the aid of the computer various ratios are calculated. The transactions (sales) and wealth (asset) approach will be used. The second level of practice involves an examination of the policies and practices of liquid asset management in one specific manufacturing company, the Standard Oil Company of British Columbia Limited. The theory considers factors external and internal to the corporation that influence its need for and management of liquid assets. Four main external factors are: (1) the demand for money, (2) the development of the Canadian short-term money market, (3) the competitive environment, and (4) improvements in technology, education, and management skills. The theory suggests a number of internal factors are also influential in determining the need for and management of corporate liquid assets. They are: (1) corporate policy, (2) the ability of management to plan and control, (3) the individual firm's demand for money, (4) the size and nature of corporate organization and activity, (5) the age of a corporation, (6) the firm's cost of capital, and (7) the firm's growth rate. The survey of the practice of corporate liquid assets at the aggregate level suggests that firms of most industrial classes and asset size categories have during the 1951-64 period: (1) increased the use of the cash balances they hold, (2) freed liquid assets to be used in more attractive alternative means, and (3) shifted their portfolio of liquid assets so as to hold a greater proportion of interest earning forms, especially higher yielding nongovernment forms. The review of the policies and practices of liquid asset management at the Standard Oil Company of British Columbia Limited indicates the effective application of much of the theory. However, various characteristics specific to the company clearly indicate that all the theory and the general practices based on aggregate empirical data are not likely to be observed in the management of one company's liquid assets. / Business, Sauder School of / Graduate

Merger review has gained in importance in both Canada and the European Union since the enactment of the Competition Act in 1986 and the Merger Regulation in 1989 respectively. The increase in international trade and the globalization of the world economy have forced both jurisdictions to reform the relevant provisions of their Competition law as concerns mergers in order to keep pace with these rapid changes. / The thesis offers a thorough description of the current merger review laws in both systems, and the proposed amendments under consideration in Canada and the EU. In the last chapter, the author compares both procedures and comes to the conclusion that, notwithstanding certain differences in objectives and perception, merger regulation in both systems seems to flow along the same lines. Canada does, however, hold a (lonely) special position as far as the 'efficiency defence' is concerned.

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This thesis reviews some of the issues concerning the criminal liability and sanctioning of corporations and individuals involved in corporate crime. Prohibitions against conspiracies to lessen competition and illegal mergers under the Combines Investigation Act are used for illustrative purposes. The nature of these offences and the goals which they are designed to achieve, from an economic and political point of view, are discussed. The limitations of the criminal law and the criminal justice system, as presented by the Law Reform Commission of Canada and Professor Packer, are used to evaluate the appropriateness of the criminal law and the criminal justice system for enforcing prohibitions against conspiracies to lessen competition and illegal mergers. It is concluded that the system is appropriate for enforcing the laws against conspiracies to lessen competition and inappropriate for regulating mergers. The corporate entity is the most common vehicle through which conspiracies to lessen competition takes place. The nature of the corporation, how it makes and implements decisions, and its relationship to individuals within the corporate structure are examined in order to shed some light on how corporate behavior can be controlled. The present methods used to attach criminal liability to corporations and an alternative method, structural liability, are discussed. The liability of individuals involved in corporate crime through aiding or acquiescing, is also considered. There is a discussion of some of the rules peculiar to corporations. The goals which judges hope to achieve in sentencing corporations for illegal conspiracies and the appropriate criminal sanctions to be used to achieve compliance from corporations and individuals involved in corporate crime are considered. A number of recommendations are made with regard to improving the control of corporate behavior through the criminal justice system. / Law, Peter A. Allard School of / Graduate