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Separation between ownership and control: where do we stand?

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  • Ariane Chapelle

Abstract

Complex structure of ownership like cross-ownership, rings, and pyramids are common in Continental Europe, Eastern Europe, and in Asia. This paper aims at dissecting these complex features by a proper measurement of direct and indirect holdings. Building on Brioschi et al. (1989), we use the input-output matrix methodology and we add control considerations in the matrix calculations to derive a straightforward method of quantifying the separation between ownership and control for a firm or a shareholder, named the “separation ratio”. After giving an overview of the full ownership structure of the listed Belgian companies, we present and apply our method to a database of more than 800 companies and individuals linked to the Belgian listed firms. Next, we replicate the approach with data from several European countries and the United States. These international comparisons allow evaluating the interactions between the economic environment of a country, and its corporate governance features.

Suggested Citation

  • Ariane Chapelle, 2004. "Separation between ownership and control: where do we stand?," Working Papers CEB 04-018.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:04-018
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    1. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
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    13. Michael Ian Cragg & I.J. Alexander Dyck, 1999. "Management Control and Privatization in the United Kingdom," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 475-497, Autumn.
    14. Ariane Chapelle, 1999. "Essays on the economics of banking and corporate governance," ULB Institutional Repository 2013/211907, ULB -- Universite Libre de Bruxelles.
    15. Ariane Chapelle, 2000. "Corporate control in Belgium," ULB Institutional Repository 2013/9961, ULB -- Universite Libre de Bruxelles.
    16. Marco Becht, 2001. "Beneficial ownership in the United States," ULB Institutional Repository 2013/13336, ULB -- Universite Libre de Bruxelles.
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    Cited by:

    1. Luis H. Gutiérrez & Carlos Pombo, 2005. "Corporate Valuation and Governance: Evidence from Colombia," Research Department Publications 3216, Inter-American Development Bank, Research Department.
    2. Gutierrez, Luis H. & Pombo, Carlos & Taborda, Rodrigo, 2008. "Ownership and control in Colombian corporations," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(1), pages 22-47, February.
    3. Luis H. Gutiérrez & Carlos Pombo & Rodrigo Taborda, 2005. "Propiedad y control en empresas colombianas," Research Department Publications 3221, Inter-American Development Bank, Research Department.
    4. repec:ctc:serie1:def14 is not listed on IDEAS
    5. Pombo, Carlos & Gutiérrez, Luis H., 2007. "Corporate Governance and Firm Valuation in Colombia," IDB Publications (Working Papers) 1608, Inter-American Development Bank.
    6. Sigríður Benediktsdóttir & Margrét V. Bjarnadóttir & Guðmundur A. Hansen, 2016. "Large exposure estimation through automatic business group identification," Annals of Operations Research, Springer, vol. 247(2), pages 503-521, December.
    7. Irfah Najihah Basir Malan & Norhana Salamudin & Noryati Ahmad, 2013. "Determinants of Firm Affiliation to Pyramid Structure: A Survey from Malaysian Public Listed Firms," Journal of Asian Scientific Research, Asian Economic and Social Society, vol. 3(6), pages 549-569, June.
    8. Piccardi, Carlo & Calatroni, Lisa & Bertoni, Fabio, 2010. "Communities in Italian corporate networks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(22), pages 5247-5258.
    9. Nicolò Pecora & Alessandro Spelta, 2014. "Shareholding Network in the Euro Area Banking Market," DISCE - Working Papers del Dipartimento di Economia e Finanza def014, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    10. Luis H. Gutiérrez & Carlos Pombo, 2005. "Valuación y gobierno corporativo: elementos de juicio de Colombia," Research Department Publications 3217, Inter-American Development Bank, Research Department.
    11. KICHIKAWA Yuichi & IINO Takahiro & IKEDA Yuichi & IYETOMI Hiroshi, 2022. "Firm-level Study on the Global Connection through Stock Ownership Relations," Discussion papers 22112, Research Institute of Economy, Trade and Industry (RIETI).
    12. Carlos Pombo & Luis H. Gutiérrez, 2007. "Gestión empresarial y valuación de empresas en Colombia," Research Department Publications 4471, Inter-American Development Bank, Research Department.
    13. 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.

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    More about this item

    Keywords

    Ownership structure – Pyramiding – Cross-ownership – Separation ratio.;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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