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Economics with policy - International seminar series
25 January 2018 - 2 pm - Budapest, Tóth Kálmán u. 4, 1097, ground floor room 13-14
Armando Rungi (IMT Lucca): Global ownership and corporate control networks
Abstract: 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 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, 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 foreign (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 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.

The Hungarian Labour Market 2016Edited by Károly Fazekas and Zsuzsa Blaskó
Centre for Economic and Regional Studies - Hungarian Academy of Sciences, Budapest, 2016.Competition and Regulation 2015Editors: Pál Valentiny • Ferenc László Kiss • Krisztina Antal-Pomázi • Csongor István Nagy
Institute of Economics
Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Budapest • 2015

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Other publications

Event:American Economic Association meetingOrganiser:  American Economic Association
Date:  3 January 2016
Place: San Francisco, California
Presentation:
Gabor Békés: Shipment Frequency of Exporters and Demand Uncertainty: An Inventory Management Approach  
Event:The Role of State in Varieties of Capitalism (SVOC) Achievements and challenges for Central and Eastern Europe and the emerging marketsOrganiser: Institute of World Economics of the Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Center for EU Enlargement StudiesCentral European University
Date: 26-27 November 2015
Place: Central European University, Budapest
Presentations:
Judit Karsai: Are CEE states successful as venture capitalists?Mária Csanádi: Chinese transformation: between varieties of capitalism and communism

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Former presentations