Power indices for indirect control of corporations

Teaser

This B.Sc. thesis was written under the joint supervision of Izabella Stach from AGH University of Science and Technology in Kraków and Jochen Staudacher from Kempten in October 2020 underlining a thriving scientific cooperation with colleagues from the AGH Kraków. The thesis studies the measurement of indirect control in corporate shareholding networks using game-theoretical power indices.

 

Short Description

In complex networks it is often difficult to identify which firms ultimately control a stock company and how much power individual firms have in the network. Due to the scarcity of adequate software in this field the main objective of this thesis is the implementation of various game-theoretic approaches for measuring the indirect control power of firms.

This includes an implementation using the R environment for the approaches by Crama and Leruth [1,2], Levy and Szafarz [4], Karos and Peters [5] and Stach and Mercik [6], which adapt the approach by Mercik and Łobos from 2016 [5].

By using a modular framework the software allows the substitution of the underlying power index for the approaches by Mercik-Łobos and
Stach-Mercik. Furthermore, the software can be used to estimate the power of linkages connecting the firms in a network.

Results

Based on the bachelor thesis, two papers were written for the Springer conference volume “Transactions on Computational Collective Intelligence (TCCI)”, which summarize and extend the results of the bachelor thesis.
The first paper was already published in 2021 [7], while the second paper has been submitted for this years volume of TCCI.

Author: Linus Olsson

Thesis submitted on: 01.03.2021

Performed: at Kempten University of Applied Sciences, Faculty of Computer Science, Computer Science bachelor program

Email: linus.m.olsson@stud.hs-kempten.de

References

[1] Crama, Y., Leruth, L.: Control and voting power in corporate networks: Concepts and computational aspects. European Journal of Operational Research 178(3), 879–893 (2007). https://doi.org/10.1016/j.ejor.2006.02.020

[2] Crama, Y., Leruth, L.: Power indices and the measurement of control in corporate structures. International Game Theory Review 15(03), 1340017 (2013). https://doi.org/10.1142/S0219198913400173

[3] Karos, D., Peters, H.: Indirect control and power in mutual control structures. Games and Economic Behavior 92, 150–165 (2015).
https://doi.org/10.1016/j.geb.2015.06.003

[4] Levy, M., Szafarz, A.: Cross-ownership: a device for management entrenchment? Review of Finance 21(4), 1675–1699 (2017). https://doi.org/10.1093/rof/rfw009

[5] Mercik, J., Łobos, K.: Index of implicit power as a measure of reciprocal ownership. In: Nguyen, N.T., Kowalczyk, R., Mercik, J. (eds.) Transactions on Computational Collective Intelligence XXIII. LNCS, vol. 9760, pp. 128–140. Springer (2016). https://doi.org/10.1007/978-3-662-52886-0 8

[6] Mercik, J., Stach, I.: On Measurement of Control in Corporate Structures. In: Nguyen, N.T., Kowalczyk, R., Mercik, J., Motylska-Ku ́zma, A. (eds.) Transactions on Computational Collective Intelligence XXXI. LNCS, vol. 11290, pp. 64–79. Springer (2018). https://doi.org/10.1007/978-3-662-58464-4 7

[7] Staudacher, J., Olsson, L., Stach, I.: Implicit power indices for measuring indirect control in corporate structures. In: Nguyen, N.T., Kowalczyk, R., Mercik, J., Motylska-Kúzma, A. (eds.) Transactions on Computational Collective Intelligence XXXVI. LNCS, vol. 13010, pp. 73–93. Springer (2021). https://doi.org/10.1007/978-3-662-64563-5 4