Determinants of Corporate Organizational Structure

• In Event: Organizational Form

Abstract

Using confidential Internal Revenue Service (IRS) data, we describe and examine corporate organizational structures. While most academic studies and media reports focus on parent firms, many parent firms operate through networks of subsidiaries that are not easily visible. To date, virtually no research examines the basic structures that firms create to operate their businesses. In this study, we examine determinants of both the size and complexity of the domestic subsidiary networks for public and private C corporations. We find that, even after including firm fixed effects, a wide array of firm characteristics are associated with firms’ organizational structure choices, including attributes related to liabilities, taxes, and business complexity. Our study provides initial insight into firms’ fundamental operational decisions regarding their organizational structure.

Authors

• Ashish Agarwal

• Shannon Chen, University of Arizona

• Steven Utke, University of Connecticut