finance; corporate networks; game theory; power indices; simulation
Abstract :
[en] This paper proposes to rely on power indices to measure the amount of control held by individual shareholders in corporate networks. The value of the indices is determined by a complex voting game viewed as the composition of interlocked weighted majority games; the compound game reflects the structure of shareholdings. The paper describes an integrated algorithmic approach which allows to deal efficiently with the complexity of computing power indices in shareholding networks, irrespective of their size or structure. In particular, the approach explicitly accounts for the presence of float and of cyclic shareholding relationships. It has been successfully applied to the analysis of real-world financial networks. (c) 2006 Elsevier B.V. All rights reserved.
Disciplines :
Finance
Author, co-author :
Crama, Yves ; Université de Liège - ULiège > HEC - École de gestion de l'ULiège > Recherche opérationnelle et gestion de la production
Leruth, Luc ; Université de Liège - ULiège > HEC-Ecole de gestion > HEC-Ecole de gestion
Language :
English
Title :
Control and voting power in corporate networks: Concepts and computational aspects
scite shows how a scientific paper has been cited by providing the context of the citation, a classification describing whether it supports, mentions, or contrasts the cited claim, and a label indicating in which section the citation was made.
Bibliography
Anthony M. Discrete Mathematics of Neural Networks: Selected Topics. SIAM Monographs on Discrete Mathematics and Applications (2001), SIAM, Philadelphia
Bang-Jensen J., and Gutin G. Digraphs: Theory, Algorithms and Applications (2000), Springer-Verlag, London
Banzhaf Jr. J.F. Weighted voting doesn't work: A mathematical analysis. Rutgers Law Review 19 (1965) 317-343
Berle A., and Means G. The Modern Corporation and Private Property (1932), MacMillan, New York
Bilbao J.M. Cooperative Games on Combinatorial Structures (2000), Kluwer Academic Publishers, Dordrecht
Brams S.J., and Affuso P.J. Power and size: A new paradox. Theory and Decision 7 (1976) 29-56
Claessens S., Djankov S., and Lang L.H.P. The separation of ownership and control in East Asian corporations. Journal of Financial Economics 58 (2000) 81-112
Claessens S., Djankov S., Fan J.P.H., and Lang L.H.P. Disentangling the incentive and entrenchment effects of large shareholdings. Journal of Finance 57 (2002) 2741-2771
Crama Y., Leruth L., Renneboog L., and Urbain J.-P. Corporate control concentration measurement and firm performance. In: Batten J.A., and Fetherston T.A. (Eds). Social Responsibility: Corporate Governance Issues (2003), Elsevier, Amsterdam 123-149
Crama, Y., Kang, K., Leruth, L., 2004. Liquidity and the notion of control. Working paper (in preparation), International Monetary Fund, Washington DC.
Cubbin J., and Leech D. The effect of shareholding dispersion on the degree of control in British companies: Theory and measurement. The Economic Journal 93 (1983) 351-369
Dubey P., and Shapley L.S. Mathematical properties of the Banzhaf power index. Mathematics of Operations Research 4 (1979) 99-131
Dubey, P., Einy, E., Haimanko, O., 2003. Compound voting and the Banzhaf power index. Discussion paper, Center for Rationality and Interactive Decision Theory, Hebrew University, Jerusalem.
Felsenthal D.S., and Machover M. The Measurement of Voting Power: Theory and Practice, Problems and Paradoxes (1998), Edward Elgar, Cheltenham, UK
Gambarelli G. Portfolio selection and firms' control. Finance 3 (1982) 69-83
Gambarelli G. Power indices for political and financial decision making. Annals of Operations Research 51 (1994) 165-173
Gambarelli G., and Owen G. Indirect control of corporations. International Journal of Game Theory 23 (1994) 287-302
Garey M.R., and Johnson D.S. Computers and Intractability: A Guide to the Theory of NP-Completeness (1979), W.H. Freeman and Company, San Francisco
Goles E., and Tchuente M. Iterative behaviour of generalized majority functions. Mathematical Social Sciences 4 (1983) 197-204
Grossman S.J., and Hart O.D. Takeover bids, the free rider problem, and the theory of the corporation. Bell Journal of Economics 11 (1980) 42-64
Hu X., and Shapley L.S. On authority distributions in organizations: Equilibrium. Games and Economic Behavior 45 (2003) 132-152
Jensen M.C., and Meckling W.H. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3 (1976) 305-360
Khatri, Y., Leruth, L., Piesse, J., 2002. Corporate performance and governance in Malaysia. Working paper 152, International Monetary Fund, Washington DC.
La Porta R., Lopez-De-Silanes F., and Shleifer A. Corporate ownership around the world. Journal of Finance 54 (1999) 471-517
Laruelle A., and Widgrén M. Is the allocation of voting power among EU states fair?. Public Choice 94 (1998) 317-339
Leech D. The relationship between shareholding concentration and shareholder voting power in British companies: A study of the application of power indices for simple games. Management Science 34 (1988) 509-527
Leech D. An empirical comparison of the performance of classical power indices. Political Studies 50 (2002) 1-22
Leech D. Voting power in the governance of the International Monetary Fund. Annals of Operations Research 109 (2002) 375-397
Leech D. Computing power indices for large voting games. Management Science 49 (2003) 831-838
Leech D., and Manjòn M.C. Corporate governance and game theoretic analyses of shareholder power: The case of Spain. Applied Economics 35 (2003) 847-858
Mann, I., Shapley, L.S., 1960. Values of large games IV: Evaluating the Electoral College by Monte Carlo techniques. Memo RM-2651, The Rand Corporation, Santa Monica, CA.
Milnor J.W., and Shapley L.S. Values of large games II: Oceanic games. Mathematics of Operations Research 3 (1978) 1-9
Nauenberg E., Basu K., and Chand H. Hirschman-Herfindahl index determination under incomplete information. Applied Economics Letters 4 (1997) 639-642
Owen G. Evaluation of a presidential election game. American Political Science Review 69 (1975) 947-953
Owen G. Characterization of the Banzhaf-Coleman index. SIAM Journal of Applied Mathematics 35 (1978) 315-327
Owen G. Game Theory (1995), Academic Press, San Diego
Penrose L.S. The elementary statistics of majority voting. Journal of the Royal Statistical Society 109 (1946) 53-57
Pohjola M. Concentration of shareholder voting power in Finnish industrial companies. Scandinavian Journal of Economics 90 (1988) 245-253
Poljak S., and Sura M. On periodical behaviour in societies with symmetric influences. Combinatorica 3 (1983) 119-121
Salvemini M.T., Simeone B., and Succi B. Analisi del possesso integrato nei gruppi di imprese mediante grafi. L'industria 4 (1995) 641-662
Shapiro N.Z., and Shapley L.S. Values of large games I: A limit theorem. Mathematics of Operations Research 3 (1978) 290-307
Shapley L.S., and Shubik M. A method for evaluating the distribution of power in a committee system. American Political Science Review 48 (1954) 787-792
Shleifer A., and Vishny R.W. A survey of corporate governance. Journal of Finance 52 (1997) 737-783
Shubik M. Game Theory in the Social Sciences: Concepts and Solutions (1982), The MIT Press, Cambridge, MA
Strand J.R. Power relations in an embedded institution: The European Bank for Reconstruction and Development. European Integration 25 (2003) 115-129
Zwiebel J. Block investment and partial benefits of corporate control. Review of Economic Studies 62 (1995) 161-185
Similar publications
Sorry the service is unavailable at the moment. Please try again later.
This website uses cookies to improve user experience. Read more
Save & Close
Accept all
Decline all
Show detailsHide details
Cookie declaration
About cookies
Strictly necessary
Performance
Strictly necessary cookies allow core website functionality such as user login and account management. The website cannot be used properly without strictly necessary cookies.
This cookie is used by Cookie-Script.com service to remember visitor cookie consent preferences. It is necessary for Cookie-Script.com cookie banner to work properly.
Performance cookies are used to see how visitors use the website, eg. analytics cookies. Those cookies cannot be used to directly identify a certain visitor.
Used to store the attribution information, the referrer initially used to visit the website
Cookies are small text files that are placed on your computer by websites that you visit. Websites use cookies to help users navigate efficiently and perform certain functions. Cookies that are required for the website to operate properly are allowed to be set without your permission. All other cookies need to be approved before they can be set in the browser.
You can change your consent to cookie usage at any time on our Privacy Policy page.
