Financial Intermediaries and Capital Centralization in Global FDI: A Network Approach to Tracing Transnational Corporate Control

2026-04-03

AI Summary

This study addresses the paradox of dispersed ownership and concentrated control in global cross-border mergers and acquisitions, demonstrating how corporate control is effectively centralized through intricate transnational ownership structures. By constructing a multilayer ownership network and applying network analysis methods, the paper traces control flows and identifies pivotal intermediary nodes within foreign direct investment chains, revealing how minority equity stakes are leveraged through financial intermediaries to exert substantive governance power. This approach challenges the conventional paradigm centered on ultimate beneficial owners. Empirical validation through case studies of two strategic Italian firms confirms that a small set of interconnected financial intermediaries jointly exercise de facto control, thereby exposing latent risks to economic sovereignty in critical sectors.

Technology Category

• Game Theory and Economic Paradigms: Coordination and Collaboration
• Data Mining & Knowledge Management: Graph Mining, Social Network Analysis & Community
• Multiagent Systems: Mechanism Design

Application Category

• Social Networks and Social Media: Social media analysis through the lenses of networks
• Security and Privacy: Data transparency and provenance
• Web Mining and Content Analysis: Bridging structured and unstructured data

Abstract

Understanding how corporate control concentrates in modern ownership systems is crucial in an economy increasingly shaped by cross-border mergers and acquisitions. Rather than expanding productive capacity, these operations reorganize ownership and control over existing firms through complex transnational structures involving financial intermediaries, holding companies, and investment vehicles. As a result, corporate control may become highly concentrated even when formal ownership appears fragmented. This paper examines how foreign direct investments-related capital centralization reshapes firm-level governance by tracing how control converges on individual companies through multi-layered ownership networks. Focusing on two strategically relevant Italian firms, we show that control is rarely exercised solely by ultimate owners, but instead arises from the interaction of a small set of financially interconnected intermediaries operating along transnational ownership chains. The results show how small equity stakes translate into substantial governance power, highlighting the role of financial intermediation and raising implications for strategic autonomy and economic sovereignty in key sectors.

Problem

• corporate control
• financial intermediaries
• capital centralization
• foreign direct investment
• ownership networks

Innovation

• network approach
• corporate control
• financial intermediaries
• capital centralization
• transnational ownership