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The network of global corporate control

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Author Info

  • Stefania Vitali
  • James B. Glattfelder
  • Stefano Battiston

Abstract

The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic "super-entity" that raises new important issues both for researchers and policy makers.

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File URL: http://arxiv.org/pdf/1107.5728
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Bibliographic Info

Paper provided by arXiv.org in its series Papers with number 1107.5728.

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Date of creation: Jul 2011
Date of revision: Sep 2011
Publication status: Published in PLoS ONE 6(10), e25995 (2011)
Handle: RePEc:arx:papers:1107.5728

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Web page: http://arxiv.org/

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References

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  1. Ballester, Coralio & Calvó-Armengol, Antoni & Zenou, Yves, 2005. "Who’s Who in Networks. Wanted: The Key Player," CEPR Discussion Papers 5329, C.E.P.R. Discussion Papers.
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  4. Giorgio Fagiolo & Javier Reyes & Stefano Schiavo, 2008. "The World-Trade Web: Topological Properties, Dynamics, and Evolution," Sciences Po publications 2008/16, Sciences Po.
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  6. Goergen, M. & Martynova, M. & Renneboog, L.D.R., 2005. "Corporate Governance Convergence: Evidence from Takeover Regulation Reforms in Europe," Discussion Paper 2005-017, Tilburg University, Tilburg Law and Economic Center.
  7. Gillan, Stuart L. & Starks, Laura T., 2000. "Corporate governance proposals and shareholder activism: the role of institutional investors," Journal of Financial Economics, Elsevier, vol. 57(2), pages 275-305, August.
  8. J. B. Glattfelder & S. Battiston, 2009. "Backbone of complex networks of corporations: The flow of control," Papers 0902.0878, arXiv.org, revised Aug 2009.
  9. Davis, Gerald F. & Kim, E. Han, 2007. "Business ties and proxy voting by mutual funds," Journal of Financial Economics, Elsevier, vol. 85(2), pages 552-570, August.
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Citations

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Cited by:
  1. Andreas Joseph & Stephan Joseph & Guanrong Chen, 2013. "Cross-border Portfolio Investment Networks and Indicators for Financial Crises," Papers 1306.0215, arXiv.org, revised Jan 2014.
  2. Li, Huajiao & An, Haizhong & Gao, Xiangyun & Huang, Jiachen & Xu, Qun, 2014. "On the topological properties of the cross-shareholding networks of listed companies in China: Taking shareholders’ cross-shareholding relationships into account," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 406(C), pages 80-88.
  3. Battiston, Stefano & Delli Gatti, Domenico & Gallegati, Mauro & Greenwald, Bruce & Stiglitz, Joseph E., 2012. "Liaisons dangereuses: Increasing connectivity, risk sharing, and systemic risk," Journal of Economic Dynamics and Control, Elsevier, vol. 36(8), pages 1121-1141.
  4. Stefania Vitali & Stefano Battiston, 2013. "The Community Structure of the Global Corporate Network," Papers 1301.2363, arXiv.org.
  5. Carlo Altomonte & Armando Rungi, 2013. "Business Groups as Hierarchies of Firms: Determinants of Vertical Integration and Performance," Working Papers 2013.33, Fondazione Eni Enrico Mattei.
  6. Ramón Jesús Flores Díaz & Elisenda Molina & Juan Tejada, 2013. "The Shapley group value," Statistics and Econometrics Working Papers ws133430, Universidad Carlos III, Departamento de Estadística y Econometría.
  7. Lorenzo Burlon, 2012. "How Do Aggregate Fluctuations Depend on the Network Structure of the Economy?," Working Papers in Economics 278, Universitat de Barcelona. Espai de Recerca en Economia.
  8. Hayafumi Watanabe, 2013. "Mean field approximation for biased diffusion on Japanese inter-firm trading network," Papers 1401.0124, arXiv.org, revised Feb 2014.
  9. Paolo Tasca & Stefano Battiston, . "Market Procyclicality and Systemic Risk," Working Papers ETH-RC-12-012, ETH Zurich, Chair of Systems Design.
  10. Leonidas Sandoval Junior, 2011. "Pruning a Minimum Spanning Tree," Papers 1109.0642, arXiv.org.
  11. Slobodan Lakic, 2013. "Concentration In Banking -- A Paradigm Of Manipulative Control And Power," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 9(1), pages 53-62.
  12. Rammelt, Crelis F. & Boes, Jan, 2013. "Galtung meets Daly: A framework for addressing inequity in ecological economics," Ecological Economics, Elsevier, vol. 93(C), pages 269-277.
  13. Donici, Andreea-Nicoleta & Calance, Mădălina, 2013. "Controversele Globalizării Economice
    [The Controversies of Economical Globalization]
    ," MPRA Paper 44072, University Library of Munich, Germany.
  14. Jo, Tae-Hee & Henry, John F., 2013. "Take the Money and Run: The Business Enterprise in the Age of Money Manager Capitalism," MPRA Paper 48782, University Library of Munich, Germany.
  15. Caetano, Marco Antonio Leonel & Yoneyama, Takashi, 2012. "A method for detection of abrupt changes in the financial market combining wavelet decomposition and correlation graphs," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(20), pages 4877-4882.
  16. Sandoval, Leonidas, 2012. "Pruning a minimum spanning tree," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(8), pages 2678-2711.
  17. Stefania Vitali & Stefano Battiston & Mauro Gallegati, . "Financial fragility and distress propagation in a network of regions," Working Papers ETH-RC-12-016, ETH Zurich, Chair of Systems Design.
  18. Lee, Li Way, 2013. "Merger wave in a small world: Two views," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 43(C), pages 68-71.

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