Control consolidation with a threshold: an algorithm

Besides multiple voting rights, board representation and shareholders’ monitoring, control tunnelling over firms can be reached through pyramids, cross-ownership and other complex features. This phenomenon is frequent in Europe and Asia. However, the theoretical literature has not yet converged towards a well-defined and robust measurement of integrated control that takes into account the threshold for control as applied in practice. Based on graph theory, this paper aims at filling this gap and proposes a new algorithm for evaluating the control tunnelling exerted by the firms’ ultimate shareholders. Then, the paper discusses the various forms of control existing next to voting shares, like multiple voting rights, board representation and active monitoring, before suggesting ways to include them into the modelling of control.