Premium
Corporates’ control strategies using network optimization
Author(s) -
Martins Pedro,
Neves Elisabete
Publication year - 2017
Publication title -
international transactions in operational research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.032
H-Index - 52
eISSN - 1475-3995
pISSN - 0969-6016
DOI - 10.1111/itor.12288
Subject(s) - shareholder , corporate governance , business , stock market , stock (firearms) , industrial organization , control (management) , finance , computer science , artificial intelligence , mechanical engineering , paleontology , horse , engineering , biology
The ownership of a quoted company is usually spread among various shareholders. This dispersion can be characterized by an oriented network, whose nodes represent the companies, and an arc between companies i and j , with weight s ij , indicates that company i owns s ij percent of company j , being denoted by stock shareholding network (SSN). Given two sets of companies T and C 0 from a SSN, we say that the companies in C 0 control those in T if they own or imply ownership of at least α j percent of companies’ T shares. So, given a targeting set T , our problem is to find a set of companies C 0 in which we invest such that the entire investment cost is the lowest. This problem has relevant applications in corporate governance and it can be modeled within network optimization. We discuss its applicability using a broad set of companies in the European stock market.