Do you think there is anything wrong with one corporation holding stock in another?

Question

Do you think there is anything wrong with one corporation holding stock in another?

Answer 1

companies do it all the time  - the company that owns the company I work for is in the fortune 500 and owns about 90 other companies -probably all corporations. Microsoft is trying to do that with Yahoo

Answer 2

It is true, as the others have said, that this is done all the time. However, from a financial perspective this can be bad because often the stock dividends will be taxes twice for each company - leading to a loss of money.

Morally, no it's business as usual.

However, sometimes when a group of companies all own each other they can be called a monopoly. For example, if GM, Ford, Chrysler, Toyota, and Honda were to all own large portions of each other they would be able to know the others' prices and plans. This means they might all work together to increase prices.

In this case, it is actually bad, but the Federal Trade Commission is supposed to investigate this. Companies know not to use this way because, ironically, is too easy to figure out that they're talking amongst each over. Often, they use the same law firm and use that to relay the information (non-legal, but harder to find out).

Answer 3

a corporation is allowed to own shares of another corporation as long as the second is not an subchapter s corporation

Answer 4

no, it is done a million times a day