Who Possesses Whom in Terms of the Global Ownership Network

The concentration of wealth has become a momentous and contentious global issue as the world has grown more tightly connected through economic relations. The objective of this chapter is to address the question of who possesses whom through a web of stock ownership relations on a global scale. We construct annual ownership networks annually on the basis of a comprehensive database that includes virtually all of the world’s listed firms and their market capitalizations. The networks thus constructed are first decomposed into bow-tie components with the giant strongly-connected components making up a core that mainly consists of Japanese listed firms. The Helmholtz–Hodge decomposition, which allows flow structures to be decomposed into a directed network of hierarchical and circular flow components, is then applied to the strongly-connected components in order to resolve multilateral cross-holding relationships embedded within them. The Helmholtz–Hodge potential quantitatively illuminates the hierarchical structure of ownership networks. In addition to the direct owners of the listed firms, their ultimate owners are traceable through the hierarchical ownership flow. We discuss this issue from a wide variety of viewpoints, including the hierarchical positions of countries, the distribution of corporate equity holdings within them, cross-ownership between them, and the progressive dominance of institutional investors based in the United States.