IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0237862.html
   My bibliography  Save this article

The power of corporate control in the global ownership network

Author

Listed:
  • Takayuki Mizuno
  • Shohei Doi
  • Shuhei Kurizaki

Abstract

As passive investment through index funds and Exchange Traded Funds (ETFs) has become pervasive, the structure of corporate control in the global capital market is more complex than before. We propose a new model and calculation algorithm to measure a shareholder’s power to control corporations in the global economy. Our method takes into account how fragmented voting rights attached to dispersed ownership may be consolidated to generate corporate control. Analyzing the ownership holdings in 49 million companies worldwide by 69 million shareholders in 2016, we find that the landscape of global corporate control appears differently if we adequately evaluate indirect influence via dispersed ownership. In particular, a larger portion of corporate control appears to be concentrated in the hands of sovereign governments than has been recognized before. Yet, such governmental capacities are “hidden” if we use the conventional method. Moreover, financial institutions appear to not be as powerful as emphasized before. These results point to important financial and political risks both for scholars and policymakers.

Suggested Citation

  • Takayuki Mizuno & Shohei Doi & Shuhei Kurizaki, 2020. "The power of corporate control in the global ownership network," PLOS ONE, Public Library of Science, vol. 15(8), pages 1-19, August.
    • Handle: RePEc:plo:pone00:0237862
    DOI: 10.1371/journal.pone.0237862
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0237862
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0237862&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0237862?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Milan Babic & Javier Garcia-Bernardo & Eelke M. Heemskerk, 2020. "The rise of transnational state capital: state-led foreign investment in the 21st century," Review of International Political Economy, Taylor & Francis Journals, vol. 27(3), pages 433-475, May.
    2. Gur Aminadav & Elias Papaioannou, 2020. "Corporate Control around the World," Journal of Finance, American Finance Association, vol. 75(3), pages 1191-1246, June.
    3. Cesarino Bertini & Jacek Mercik & Izabella Stach, 2016. "Indirect control and power," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 26(2), pages 7-30.
    4. Luigi Zingales, 1995. "What Determines the Value of Corporate Votes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1047-1073.
    5. Mr. Andre O Santos, 2015. "Integrated Ownership and Control in the GCC Corporate Sector," IMF Working Papers 2015/184, International Monetary Fund.
    6. Stefania Vitali & James B Glattfelder & Stefano Battiston, 2011. "The Network of Global Corporate Control," PLOS ONE, Public Library of Science, vol. 6(10), pages 1-6, October.
    7. Chapelle, Ariane & Szafarz, Ariane, 2005. "Controlling firms through the majority voting rule," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 355(2), pages 509-529.
    8. Dennis Leech, 2002. "An Empirical Comparison of the Performance of Classical Power Indices," Political Studies, Political Studies Association, vol. 50(1), pages 1-22, March.
    9. Luc Laeven & Ross Levine, 2008. "Complex Ownership Structures and Corporate Valuations," The Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 579-604, April.
    10. Dennis Leech, 1988. "The Relationship Between Shareholding Concentration and Shareholder Voting Power in British Companies: A Study of the Application of Power Indices for Simple Games," Management Science, INFORMS, vol. 34(4), pages 509-527, April.
    11. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    12. Shapley, L. S. & Shubik, Martin, 1954. "A Method for Evaluating the Distribution of Power in a Committee System," American Political Science Review, Cambridge University Press, vol. 48(3), pages 787-792, September.
    13. Fichtner, Jan & Heemskerk, Eelke M. & Garcia-Bernardo, Javier, 2017. "Hidden power of the Big Three? Passive index funds, re-concentration of corporate ownership, and new financial risk†," Business and Politics, Cambridge University Press, vol. 19(2), pages 298-326, June.
    14. Brioschi, Francesco & Buzzacchi, Luigi & Colombo, Massimo G., 1989. "Risk capital financing and the separation of ownership and control in business groups," Journal of Banking & Finance, Elsevier, vol. 13(4-5), pages 747-772, September.
    15. Karl V. Lins & Paolo Volpin & Hannes F. Wagner, 2013. "Does Family Control Matter? International Evidence from the 2008--2009 Financial Crisis," The Review of Financial Studies, Society for Financial Studies, vol. 26(10), pages 2583-2619.
    16. Brancaccio, Emiliano & Giammetti, Raffaele & Lopreite, Milena & Puliga, Michelangelo, 2018. "Centralization of capital and financial crisis: A global network analysis of corporate control," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 94-104.
    17. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, vol. 65(3), pages 365-395, September.
    18. Gambarelli, Gianfranco & Owen, Guillermo, 1994. "Indirect Control of Corporations," International Journal of Game Theory, Springer;Game Theory Society, vol. 23(4), pages 287-302.
    19. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
    20. Yves Crama & Luc Leruth, 2013. "Power Indices And The Measurement Of Control In Corporate Structures," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 15(03), pages 1-15.
    21. Crama, Yves & Leruth, Luc, 2007. "Control and voting power in corporate networks: Concepts and computational aspects," European Journal of Operational Research, Elsevier, vol. 178(3), pages 879-893, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiaoping Huo & Hongying Lin & Yanan Meng & Peter Woods, 2021. "Institutional investors and cost of capital: The moderating effect of ownership structure," PLOS ONE, Public Library of Science, vol. 16(4), pages 1-18, April.
    2. Takayuki Mizuno & Shohei Doi & Takahiro Tsuchiya & Shuhei Kurizaki, 2021. "Socially responsible investing through the equity funds in the global ownership network," PLOS ONE, Public Library of Science, vol. 16(8), pages 1-22, August.
    3. Baines, Joseph & Hager, Sandy Brian, 2022. "From Passive Owners to Planet Savers? Asset Managers, Carbon Majors and the Limits of Sustainable Finance," EconStor Preprints 249674, ZBW - Leibniz Information Centre for Economics.
    4. Kosztyán, Zsolt Tibor & Király, Ferenc & Kurbucz, Marcell Tamás, 2024. "Európai cégek tulajdonosi szerkezetének dinamikus hálózatelemzése [Investigating the ownership structure of European companies using dynamic network analysis methods]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 57-85.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marc Levy & Ariane Szafarz, 2017. "Cross-Ownership: A Device for Management Entrenchment?," Review of Finance, European Finance Association, vol. 21(4), pages 1675-1699.
    2. Levy, Marc, 2011. "The Banzhaf index in complete and incomplete shareholding structures: A new algorithm," European Journal of Operational Research, Elsevier, vol. 215(2), pages 411-421, December.
    3. Edwards, Jeremy S.S. & Weichenrieder, Alfons J., 2009. "Control rights, pyramids, and the measurement of ownership concentration," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 489-508, October.
    4. Gur Aminadav & Elias Papaioannou, 2020. "Corporate Control around the World," Journal of Finance, American Finance Association, vol. 75(3), pages 1191-1246, June.
    5. Taylan Mavruk & Conny Overland & Stefan Sjögren, 2020. "Keeping it real or keeping it simple? Ownership concentration measures compared," European Financial Management, European Financial Management Association, vol. 26(4), pages 958-1005, September.
    6. Brancaccio, Emiliano & Giammetti, Raffaele & Lopreite, Milena & Puliga, Michelangelo, 2018. "Centralization of capital and financial crisis: A global network analysis of corporate control," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 94-104.
    7. Jeremy Edwards & Alfons J. Weichenrieder & Alfons Weichenrieder, 2004. "How Weak is the Weakest-Link Principle? On the Measurement of Firm Owners’ Control Rights," CESifo Working Paper Series 1255, CESifo.
    8. Marc Levy, 2006. "Control in Pyramidal Structures," Working Papers CEB 06-023.RS, ULB -- Universite Libre de Bruxelles.
    9. Crama, Yves & Leruth, Luc, 2007. "Control and voting power in corporate networks: Concepts and computational aspects," European Journal of Operational Research, Elsevier, vol. 178(3), pages 879-893, May.
    10. Nadia Saghi-Zedek, 2016. "Product diversification and bank performance: does ownership structure matter?," Post-Print halshs-01342528, HAL.
    11. Mário Santos & António Moreira & Elisabete Vieira, 2014. "Ownership concentration, contestability, family firms, and capital structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1063-1107, November.
    12. Pindado, Julio & Requejo, Ignacio & Rivera, Juan C., 2017. "Economic forecast and corporate leverage choices: The role of the institutional environment," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 121-144.
    13. Saghi-Zedek, Nadia, 2016. "Product diversification and bank performance: Does ownership structure matter?," Journal of Banking & Finance, Elsevier, vol. 71(C), pages 154-167.
    14. Sabri Boubaker & Pascal Nguyen & Wael Rouatbi, 2016. "Multiple Large Shareholders and Corporate Risk†taking: Evidence from French Family Firms," European Financial Management, European Financial Management Association, vol. 22(4), pages 697-745, September.
    15. Tristan Auvray & Olivier Brossard, 2013. "French connection: interlocking directorates and the ownership-control nexus in an insider governance system," Working Papers hal-00842582, HAL.
    16. Christopher Hansen & Joern Block & Matthias Neuenkirch, 2020. "Family Firm Performance Over The Business Cycle: A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 34(3), pages 476-511, July.
    17. Massa, Massimo & O'Donovan, James & Zhang, Hong, 2022. "International asset pricing with strategic business groups1," Journal of Financial Economics, Elsevier, vol. 145(2), pages 339-361.
    18. Wei Zhang & Xiong Xiong & Guanying Wang & Jing Li, 2022. "The accounting and trading information channels of excess control rights on IPO long-term return in China," Review of Quantitative Finance and Accounting, Springer, vol. 59(4), pages 1609-1646, November.
    19. Stylianos Artsidakis & Yiannis Thalassinos & Theofanis Petropoulos & Konstantinos Liapis, 2022. "Optimum Structure of Corporate Groups," JRFM, MDPI, vol. 15(2), pages 1-16, February.
    20. Martínez-García, Irma & Basco, Rodrigo & Gómez-Ansón, Silvia, 2021. "Dancing with giants: Contextualizing state and family ownership effects on firm performance in the Gulf Cooperation Council," Journal of Family Business Strategy, Elsevier, vol. 12(4).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0237862. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.