Global Ownership and Corporate Control Networks
Social Science Research Network
In this contribution, at ...rst, we introduce a basic network framework to study pyramidal structures and wedges between ownership and control of companies. Then, we apply it to a dataset of 53.5 million of companies operating in 208 countries. Among others, we detect a strong concentration of corporate power, as less than 1% of parent companies collect more than 100 subsidiaries, but they are responsible for more than 50% of global sales. Therefore, we show that the role of indirect control,
... e., through middlemen subsidiaries, is relevant in 15% of domestic and 54% of foreign subsidiaries. Among foreign companies, cases emerge of blurring nationality, when control paths cross more than one national border, in the presence of multiple passports (19.1%), indirectly foreign (24.5%), and round-tripping subsidiaries (1.33%). Finally, we relate indirect control strategies to country indicators of the institutional environment. We ...nd that pyramidal structures arise less likely in the presence of good ...nancial and contractual institutions in the parent's country, as these foster more transparent forms of corporate governance. Instead, parent companies choose indirect control through countries of subsidiaries that have better ...nancial institutions, possibly because it is easier to coordinate decisions from remote. Finally, we ...nd that o¤shore ...nancial centers are preferred jurisdictions for middlemen subsidiaries, probably due to a lower taxation and a lack of ...nancial disclosure.