Integrated Ownership and Control in the GCC Corporate Sector

IMF Working Papers, August 3, 2015

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Integrated Ownership and Control in the GCC Corporate Sector

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Bibliographic details

• Authors: Andre O Santos
• Published: August 3, 2015
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781513589459.001

Objective and scope

• Objective: to assess ownership and control links in the GCC corporate sector.
• Scope: analysis focuses on the integrated ownership and network arising from ownership data available in Bloomberg and GCC stock exchanges.

Data and methodology

• Data sources: ownership data available in Bloomberg and GCC stock exchanges.
• Conceptual approach: constructs an integrated ownership network and evaluates alternative definitions of control, including the control threshold used in Zingales (1994).

Key findings

• Ownership concentration:
  • Ownership is concentrated in GCC public sector institutions, holding companies, financial institutions, and family groups.
• Debt concentration and control definition:
  • The distribution of consolidated debt depends on the definition of control.
  • Debt concentration is maximized when the wedge between ownership and control is the largest.
  • This maximal debt concentration occurs when the largest shareholder has at least 5 percent of total shares as defined in Zingales (1994).

Analytical implications

• The choice of control definition materially affects measured concentration of shareholder portfolios and consolidated shareholder debt.
• Network analysis of integrated ownership highlights the prominent role of public sector institutions, holding companies, financial institutions, and family groups in GCC corporate control structures.

Policy implications and recommendations

• Regulators and analysts should account for how control definitions (for example, the 5 percent threshold in Zingales (1994)) change assessments of debt concentration and systemic risk.
• Corporate governance reforms and disclosure policies in the GCC could consider targeted transparency measures for entities identified as concentrated owners (public sector institutions, holding companies, financial institutions, family groups) to better monitor consolidated debt exposures.

Integrated Ownership and Control in the GCC Corporate Sector — Andre O Santos, August 3, 2015

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