Separation between ownership and control: where do we stand?

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.