Emilie Feldman, Management, The Wharton School
Strategic Management Journal, August 2020
Abstract: This paper investigates the corporate parenting advantage, the extent to which corporate parents improve the performance of theirsubsidiaries. Despite the importance of this concept forcorporate strategy, researchers have yet to quantify itempirically. I measure the corporate parenting advantage by comparing the performance of utilities that werelegally classified into one of two types of holding companies: regulated holding companies, which faced limitson their ability to parent, and exempt holding companies, which did not. I find that observationally similar utilities that were owned by exempt holding companies outperform utilities that were owned by regulated holding companies, and that this performance differential attenuates once the legal restrictions on parenting were lifted. These results provide the first large-scale empiricalevidence of the corporate parenting advantage