α-Indirect Control in Onion-like Networks

Tens of thousands of parent companies control millions of subsidiaries through long chains ofintermediary entities in global corporate networks. Conversely, tens of millions of entities aredirectly held by sole owners. We propose an algorithm for identification of ultimate controllingentities in such networks that unifies direct and indirect control and allows for continuousinterpolation between the two concepts via a factor damping long paths. By exploiting onion-likeproperties of ownership networks the algorithm scales linearly with the network size and handlescircular ownership by design. We apply it to the universe of 4.2 mln UK companies and 4 mln oftheir holders to understand the distribution of control in the country. Furthermore, we providethe first independent evaluation of the control identification results. We reveal that the proposed{\alpha}-ICON algorithm identifies more than 96% of beneficiary entities from the evaluation set andsupersedes the existing approaches reported in the literature. We refer the superiority of{\alpha}-ICONalgorithm to its ability to correctly identify the parents long away from their subsidiaries in thenetwork.