relation: http://eprints.imtlucca.it/3767/
title: Global ownership and corporate control networks
creator: Rungi, Armando
creator: Morrison, Greg
creator: Pammolli, Fabio
subject: HB Economic Theory
subject: HG Finance
description: In this contribution, at first, 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 concentra-  tion 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, i.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 for-  eign (24.5%), and round-tripping subsidiaries (1.33%). Finally, we relate indirect control strategies  to country indicators of the institutional environment. We find that pyramidal structures arise less  likely in the presence of good financial 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 financial institutions, possibly because it  is easier to coordinate decisions from remote. Finally, we find that offshore financial centers are  preferred jurisdictions for middlemen subsidiaries, probably due to a lower taxation and a lack of  financial disclosure.
publisher: IMT School for Advanced Studies Lucca
date: 2017-09
type: Working Paper
type: NonPeerReviewed
format: application/pdf
language: en
rights: cc_by_nd
identifier: http://eprints.imtlucca.it/3767/1/EIC_WP_7_2017.pdf
identifier:   Rungi, Armando and Morrison, Greg and Pammolli, Fabio  Global ownership and corporate control networks.  EIC working paper series  #7/2017    IMT School for Advanced Studies Lucca    ISSN 2279-6894.