Business Groups in Israel: Development, Diversification, and External Finance
Aug 21, 2012
Stanislav Sokolinski
Publisher: Milken Institute

Wealthy families and individuals tend to control a large number of corporations within a given economy. Family business groups might consist of hundreds of firms operating in many sectors. For example, 85 business groups control more than half the aggregate stock value in South Korea, and six family groups control 20 percent of stock market capitalization in Denmark.

These business groups have always been a dominant form of economic organization in Israel and have purportedly played a critical role in Israel's economic development. Previous work has shown that 20 business groups account for nearly 50 percent of the market capitalization of the Tel-Aviv Stock Exchange.

The report "Business Groups in Israel: Development, Diversification, and External Finance" further investigates the business group phenomenon in contemporary Israel. It summarizes the historical development of business groups and examines the diversification of business groups and the multimarket contacts that result. The report also includes an international comparison of business groups' dominance based on data from recent literature and an analysis of the groups' capital structure, bond issues and dividend payments.