Control consolidation with a threshold: an algorithm

Email: ariane.chapelle{at}ulb.ac.be Corresponding author. Email: aszafarz{at}ulb.ac.be Received on 14 October 2005. Accepted on 21 November 2006. Besides multiple voting rights, board representation and shareholders’monitoring, control tunnelling over firms can be reached throughpyramids, cross-ownership and other complex features. This phenomenonis frequent in Europe and Asia. However, the theoretical literaturehas not yet converged towards a well-defined and robust measurementof integrated control that takes into account the thresholdfor control as applied in practice. Based on graph theory, thispaper aims at filling this gap and proposes a new algorithmfor evaluating the control tunnelling exerted by the firms’ultimate shareholders. Then, the paper discusses the variousforms of control existing next to voting shares, like multiplevoting rights, board representation and active monitoring, beforesuggesting ways to include them into the modelling of control.