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Parent Company

Definition

A parent company is a company that owns enough voting stock in another firm to control management and operation by doing and influencing or electing its board of directors. The second company is deemed a subsidiary of the parent company.

Parent Company

What is a 'Parent Company'

A parent company is a company that controls other, smaller businesses by owning an influential amount of voting stock or control. Parent companies are typically larger firms that exhibit control over one or more small subsidiaries in either the same industry or complimentary industries. Parent companies can be either hands-on or hands-off with subsidiaries, depending on the amount of managerial control given to subsidiary managers.

Explaining 'Parent Company'

A parent company is a larger corporation that has significant ownership over a subsidiary or group of subsidiaries. These partially or wholly-owned smaller companies are controlled by the parent, to varying degrees; however, all parent companies, for the most part, own more than 50% of a subsidiary's voting stock.

Examples of Parent Companies

As of 2016, parent companies are common in public markets. in fact, with a rise in corporate mergers and top-heavy industries, parent companies are becoming the norm. When Facebook acquired Instagram, for example, it became Instagram's parent company. Instagram, on the other hand, became Facebook's subsidiary. The two companies operate in joint ventures, but Instagram still has an autonomous team in place, including its original founders and CEO.


Parent Company FAQ

What is parent company example?

A parent company holds enough voting stock in another company to have control of operations. Examples include Facebook, the parent company of both Instagram and WhatsApp, and Amazon, the parent company of Whole Foods.

What is the difference between subsidiary and parent company?

A parent company owns the majority stock of another company, the subsidiary, and has control of its operations.

Can a parent company be an LLC?

An LLC, or Limited Liability Company, is a model of business structure. A parent company can be organized as an LLC.

Who is Google's parent company?

Alphabet, Inc. the parent company of Google.

What are the 3 economics questions?

In economics, the basic questions that must be answered are: What goods and services should be produced? How should the goods be produced? For who are the goods and services?

What are the 3 economic questions that must be answered?

The basic economics questions are: What goods and services should be produced? How should these goods and services be produced? Who will consume these goods and services?

Further Reading

The role of the parent companyThe role of the parent company
www.oxfordhandbooks.com [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …

A note on the information content of parent company versus consolidated earnings in FinlandA note on the information content of parent company versus consolidated earnings in Finland
www.tandfonline.com [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …

A research based shareholding ratio on default contagion between parent and subsidiary company in an enterprise groupA research based shareholding ratio on default contagion between parent and subsidiary company in an enterprise group
en.cnki.com.cn [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …

The value of the parent companyThe value of the parent company
journals.sagepub.com [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …

The effects of parent company business on occupational credit union behaviourThe effects of parent company business on occupational credit union behaviour
www.tandfonline.com [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …

The parent company puzzle: when is the whole worth less than one of the parts?The parent company puzzle: when is the whole worth less than one of the parts?
www.sciencedirect.com [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …

Cultural Control of Parent Company: Differences and Integration of Joint Ventures' Cultural Statements——Based on A Multi-case Comparison of Automobile Joint …Cultural Control of Parent Company: Differences and Integration of Joint Ventures' Cultural Statements——Based on A Multi-case Comparison of Automobile Joint …
en.cnki.com.cn [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …

The international transmission of financial shocks: The case of JapanThe international transmission of financial shocks: The case of Japan
www.jstor.org [PDF]
… and Finance: Business Economics; Econometrics, Experimental and Quantitative Methods; Economic Development; Economic History; Economic Theory and Mathematical Models; Environmental, Agricultural, and Natural Resources Economics; Financial Economics; Health …


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Section 508

WCAG 2.0

Section 508