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Public Corporations”, 25 J. Fin. Econ. 371-395 (1989). Barclay
and Holderness said shareholders value the ability to “use their
voting power primarily to extract corporate benefits to the
exclusion of other shareholders”. See also Bogdanski, Federal
Tax Valuation, par. 4.03[1][e][v] n.171 (1996) (citing Barclay &
Holderness and discussing why control enhances value); Barclay &
Holderness, “Negotiated Block Trades and Corporate Control”, 46
J. Fin. No. 3, 861, 873 (1991).
Petitioners contend that Burndy-US extracted private
benefits from Burndy-Japan in the form of the management fee that
Burndy-Japan paid Burndy-US, which petitioners contend greatly
exceeded the cost of management. We disagree. Furukawa and
Sumitomo agreed to pay the management fee; it was not “extracted”
over their objection.
Petitioners contend that York testified that the management
fee greatly exceeded the cost of management. We disagree. York
testified that the management fee far exceeded the cost of
sending executives to Burndy-Japan. The cost of providing
management services included more than the cost of sending
employees to Burndy-Japan; Burndy-US did a substantial amount of
management work in the United States.
Petitioners contend that Burndy-US received private benefits
through receipt by Burndy-US and FCI from Burndy-Japan of
increasing amounts of royalties, commissions, and corporate
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