Skip to main content

The Main Methodology: Computing Control in Ownership Networks

  • Chapter
  • First Online:
Decoding Complexity

Part of the book series: Springer Theses ((Springer Theses))

  • 1002 Accesses

Abstract

In this chapter the mathematical bulk of the thesis is presented. The aim of having an exhaustive account of the methods results in the extensive scope of the chapter. As networks find their mathematical embodiment in adjacency matrices (see Appendix B), most of the formalism is comprised of linear-algebraic manipulations.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

eBook
USD 16.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Brioschi et al. (1989) use the value of the net assets.

  2. 2.

    A list of acronyms can be found in front matter of this book.

  3. 3.

    Treasury shares may have come from a repurchase of shares by the firm from shareholders or they may have never been issued to the public. These shares do not pay dividends and have no voting rights, see also Fig. 1.4.

  4. 4.

    \(\mathrm{diag }(\mathrm{diag }(A)) = \mathrm{diag }(A)\), \(\mathrm{diag }(A+B) = \mathrm{diag }(A) + \mathrm{diag }(B)\), and \(\mathrm{diag }(I) = I\).

  5. 5.

    This was also observed in Eq. (2.75).

  6. 6.

    Recall Eqs. (2.59) and (2.88) or (2.87).

  7. 7.

    It is not clear if this difference should be understood as an error in the computation or if simply \({\mathop {\nu }\limits ^{^{\circ }}}^\mathrm{int }\) is just another legitimate variant to the theme of integrated value.

  8. 8.

    Meaning on the basis of all direct and indirect paths in the network.

References

  • H. Almeida, S.Y. Park, M. Subrahmanyam, D. Wolfenzon, Beyond cash flow and voting rights: valuation and performance of firms in complex ownership structures. Working paper, New York University Stern School of Business, 2007

    Google Scholar 

  • S. Baldone, F. Brioschi, S. Paleari, Ownership measures among firms connected by cross-shareholdings and a further analogy with input-output theory, in 4th JAFEE international conference on investment and derivatives, 1998

    Google Scholar 

  • J.F. Banzhaf, Weighted voting doesn’t work: a mathematical analysis. Rutgers Law Rev. 19, 317–343 (1965)

    Google Scholar 

  • S. Battiston, Inner structure of capital control networks. Physica A 338(1–2), 107–112 (2004)

    Google Scholar 

  • P. Bonacich, Factoring and weighting approaches to status scores and clique identification. J. Math. Sociol. 2(1), 113–120 (1972)

    Article  Google Scholar 

  • P. Bonacich, Power and centrality: a family of measures. Am. J. Sociol. 92(5), 1170–1182 (1987)

    Article  Google Scholar 

  • P. Bonacich, P. Lloyd, Eigenvector-like measures of centrality for asymmetric relations. Soc. Netw. 23(3), 191–201 (2001)

    Google Scholar 

  • S.P. Borgatti, Centrality and network flow. Soc. Netw. 27(1), 55–71 (2005)

    Google Scholar 

  • S.P. Borgatti, R. Everett, A graph-theoretic perspective on centrality. Soc. Netw. 28(4), 466–484 (2006)

    Google Scholar 

  • F. Brioschi, S. Paleari, How much equity capital did the Tokyo stock exchange really raise. Finan. Eng. Japan. Mark. 2(3), 233–258 (1995)

    Google Scholar 

  • F. Brioschi, L. Buzzacchi, M.G. Colombo, Risk capital financing and the separation of ownership and control in business groups. J. Bank. Finance 13(1), 747–772 (1989)

    Google Scholar 

  • A. Chapelle, Separation of ownership and control: where do we stand? Corp. Ownersh. Control 2(2), (2005)

    Google Scholar 

  • A. Chapelle, A. Szafarz, Controlling firms through the majority voting rule. Physica A 355, 509–529 (2005)

    Article  ADS  Google Scholar 

  • Y.H. Chen, Voting power, control rents and corporate governance: an integrated analysis of owner control and corporate governance. SSRN eLibrary, 2004

    Google Scholar 

  • S. Claessens, S. Djankov, The separation of ownership and control in East Asian corporations. J. Finan. Econ. 58(1–2), 81–112 (2000)

    Google Scholar 

  • Y. Crama, L. Leruth, L.D.R. Renneboog, Corporate control concentration measurement and firm performance. Discussion paper, Tilburg University, 2003. http://ideas.repec.org/p/dgr/kubtil/200317.html

  • J. Cubbin, D. Leech, The effect of shareholding dispersion on the degree of control in British companies: theory and measurement. Econ. J. 93(370), 351–369 (1983)

    Article  Google Scholar 

  • H. Demsetz, K. Lehn, The structure of corporate ownership: causes and consequences. J. Polit. Econ. 93(6), 1155–1177 (1985)

    Article  Google Scholar 

  • B. Derrida, H. Flyvbjerg, Multivalley structure in Kauffman’s model: analogy with spin glasses. J. Phys. A.19, 1003–1008 (1986)

    Google Scholar 

  • D. Flath, Indirect shareholding within Japan’s business groups. Econ. Lett. 38(2), 223–227 (1992)

    Article  Google Scholar 

  • L.C. Freeman, Centrality in social networks conceptual clarification. Soc. Netw. 1, 215–239 (1978)

    Google Scholar 

  • L.C. Freeman, Going the wrong way on a one-way street: centrality in physics and biology. J. Soc. Struct. 9(2), (2008)

    Google Scholar 

  • J.B. Glattfelder, S. Battiston, Backbone of complex networks of corporations: the flow of control. Phys. Rev. E 80(3), 36104 (2009)

    Article  ADS  Google Scholar 

  • M. Goergen, M. Martynova, L. Renneboog, Corporate governance convergence: evidence from takeover regulation reforms in Europe. Oxford Rev. Econ. Policy 21(2), 243–268 (2005)

    Article  Google Scholar 

  • O.C. Herfindahl, Copper Costs and Prices: 1870–1957 (John Hopkins University Press, Baltimore, 1959)

    Google Scholar 

  • C.H. Hubbell, An input-output approach to clique identification. Sociometry 28(4), 377–399 (1965)

    Article  Google Scholar 

  • R. La Porta, F. Lopez de Silanes, A. Shleifer, Corporate ownership around the world. J. Finan. 54(2), 471–517 (1999)

    Google Scholar 

  • D. Leech, Corporate ownership and control: a new look at the evidence of Berle and Means. Oxford Econ. Pap. 39(3), 534–551 (1987a)

    Google Scholar 

  • D. Leech, Ownership concentration and the theory of the firm: a simple-game-theoretic approach. J. Ind. Econ. 35(3), 225–240 (1987b)

    Article  MathSciNet  Google Scholar 

  • D. Leech, The relationship between shareholding concentration and shareholder voting power in British companies: a study of the application of power indices for simple games. Manage. Sci. 34(4), 509–527 (1988)

    Article  Google Scholar 

  • D. Leech, Computation of power indices. The Warwick Economics Research Paper Series (TWERPS) 644, University of Warwick, Department of Economics, 2002a. URL http://ideas.repec.org/p/wrk/warwec/644.html

  • D. Leech, An empirical comparison of the performance of classical power indices. Polit. Stud. 50(1), 1–22 (2002b)

    Google Scholar 

  • D. Leech, J. Leahy, Ownership structure, control type classifications and the performance of large British companies. Econ. J. 101(409), 1418–1437 (1991)

    Article  Google Scholar 

  • W.W. Leontief, Input-Output Economics (Oxford University Press, Oxford, 1966)

    Google Scholar 

  • S. Prigge, The performance of shareholder influence measures: an empirical assessment of share in votes, Banzhaf index, and Shapley-Shubik index. SSRN eLibrary, 2007

    Google Scholar 

  • G. Rohwer, U. Pötter, Transition Data Analysis User’s Manual (Ruhr-University, Bochum, 2005)

    Google Scholar 

  • F. Schweitzer, G. Fagiolo, D. Sornette, F. Vega-Redondo, A. Vespignani, D.R. White, Economic networks: the new challenges. Science 325(5939), 422 (2009)

    MathSciNet  ADS  MATH  Google Scholar 

  • M. Serrano, M. Boguñá, A. Vespignani, Extracting the multiscale backbone of complex weighted networks. Proc. Nat. Acad. Sci. 106(16), 6483 (2009)

    Google Scholar 

  • L.S. Shapley, M. Shubik, A method for evaluating the distribution of power in a committee system. Am. Polit. Sci. Rev. 48(3), 787–792 (1954)

    Article  Google Scholar 

  • The Deminor Group. Application of the one share—one vote principle in Europe. Technical report, A report prepared for Association of British Insurers by Deminor, 2005. http://www.abi.org.uk/Bookshop/

  • S. Vitali, J.B. Glattfelder, S. Battiston, The network of global corporate control. PloS ONE 6(10), e25995 (2011)

    Article  ADS  Google Scholar 

  • E. Wigner, The unreasonable effectiveness of mathematics in the natural sciences. Commun. Pure Appl. Math. 13(1), 222–237 (1960)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to James B. Glattfelder .

Rights and permissions

Reprints and permissions

Copyright information

© 2013 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Glattfelder, J.B. (2013). The Main Methodology: Computing Control in Ownership Networks. In: Decoding Complexity. Springer Theses. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-33424-5_2

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-33424-5_2

  • Published:

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-33423-8

  • Online ISBN: 978-3-642-33424-5

  • eBook Packages: Physics and AstronomyPhysics and Astronomy (R0)

Publish with us

Policies and ethics