Integration of Register’s and
Surveys’ data on MNEs
Morganti E. – ISTAT
21th Wiesbaden City Group – International Roundtable on
Business Survey Frames Paris – 24 – 27 November 2008
Session No 6c –Measurements of Multinationals and
Enterprise Groups
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The Italian Business Register on EG is built up from:
INTEGRATION OF:
1.
Administrative sources

Advantages

Limitations
2.
Statistical survey

Problems, inconcistencies

Improvement in quality
Similar problems to be faced soon with EGR
1. Administrative sources’ integration
The Register is build up annually, integrating
three different administrative sources:
•
The archive of all shareholders of non
listed companies (Chamber of commerce)
•
The archive of all shareholders of listed
companies (Stock Exchange)
•
Consolidated Accounts
Advantages:
1. Each source collects information about
shareholders or control relationships on
the basis of a legal provision
1. The timing of updating of the sources
is coherent, with some exceptions for
the financial sector only.
2. All the three sources contain a
common identification code for all
resident units
Result of administrative sources integration:
CONSOLIDATED ACCOUNTS
11,3
0,9
STOCK
EXCHANGE
2,9
0,4
0,1
0,1%
9,4
75
CHAMBERS OF
COMMERCE
Contribution from each source to coverage of
resident and non resident units
Abroad
Global Group Head
STOCK EXCHANGE
1
First Shot
CHAMBERS OF
COMMERCE
2
ITALY
3
4a
Abroad
5a
6a
4b
Resident units
CHAMBERS OF
COMMERCE,
STOCK EXCHANGE
CONSOLIDATED ACCOUNTS
4c
5b
5c
Foreign affiliates
STOCK EXCHANGE,
CONSOLIDATED
ACCOUNTS
Candidates for Group Head after process of
integration
1. a real Domestic Global Group Head of a
multinational group;
2. a real Foreign Global Group Head of a
multinational group;
3. a Domestic Truncated Group Head of a
multinational group;
4. a Foreign First Shot unit (or immediate
parent), whose Global Group Head could be
either foreign or even domestic;
5. a Foreign Branch registered in Italy, whose
Global Group Head is Foreign.
Candidates for Group Head after process of
integration
GB
b)
a)
IT
IT
IT
IT
c)
GB
d)
?
IT ?
IT
GB
IT
IT
IT
e)
?
BRANCH
IT
IT
2. Survey’ structure
•Biannual
•Enterprises and local units (branches)
•From C to K and M-N-O of the NACE
•The respondent self-classifies itself:
•independent enterprise,
•an enterprise belonging to a group with domestic
control,
•an enterprise belonging to a group with foreign control,
•a branch of a foreign enterprise.
•In case of non independency:
•denomination of the Ultimate Controlling Unit (UCI)
•country of residence of the Ultimate Controlling Unit (UCI)
No other information about its immediate parent or the
upward chain of control between itself and the UCI.
Feedback from the Survey
•The respondent units was not included into the
Register
the survey provides it and its UCI.
•The respondent unit is a GH in the Register
The surveys indicates a superior UCI.
•The respondent unit is intermediate in the
Register
the survey indicates an UCI different from the
GH of the Register.
How to integrate?
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•The respondent units was not included into the
Register
the survey provides it and its UCI.
•A non resident unit is included into the BR
•A new indirect relationship is created
•A new group is created
1.
GB
…….?.........
IT
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•The respondent unit is a GH in the Register
The surveys indicates a superior UCI.
•A new indirect relationship is created
2.
IT
GB
……?.…..
IT
IT
IT
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•The respondent unit is intermediate in the Register
the survey indicates an UCI different from the GH of the
Register.
3.
Group before survey
Feedback from survey
GB
FR
IT
……?........
IT
3.I – One group
Change of UCI
IT
Surveyed unit
3.II – Two groups
Keep downward relationships
FR
3.III – Two groups
Break downward relationships
GB
……?........
GB
G
B
IT
IT
FR
IT
…?...
……?........
IT
FR
IT
IT
?
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Solution applied
Complex solutions based on the principle of:
-minimising the breaking of groups’ structures in the
Register
-S.t a good level of coherence with the survey’s result
By taking into account:
-Distance of the respondent unit to the UCI
-Dimension of the respondent unit
-Number of units involved in the change and their dimension
-Final check of coherency with survey’s result and with
Register’s structure
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Groups'
size
class
Before the survey
integration
After the survey
integration
Groups
Enter.
Empl.
Groups
Enter.
Empl.
%
%
%
%
%
%
1-19
8,4
5,3
5,9
11,1
7,1
4,0
20-99
5,6
3,6
5,8
10,2
6,6
8,8
100-499
10,3
6,5
11,2
19,7
13,9
25,4
500-4999
16,6
9,9
16,5
33,1
20,6
63,6
5000 +
15,8
3,5
12,3
32,0
6,6
27,5
Total
empl.
Total
8,0
5,3
12,0
12,0
9,0
23,8
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Groups'
size
class
N. enterpr.
Before the survey
integration
After the survey
integration
Groups
Enter.
Empl.
Groups Enter.
Empl.
%
%
%
%
%
%
1
20,5
20,5
26,5
28,6
28,6
46,6
2
1,9
1,9
8,0
3,4
3,4
17,3
3-4
2,4
2,4
9,9
4,6
4,7
24,9
5-9
5,6
5,8
23,5
10,7
11,2
35,5
10-49
7,7
7,9
7,9
16,2
17,2
22,0
50 +
2,7
1,8
0,3
6,7
3,9
0,7
Total
8,0
5,3
12,0
12,0
9,0
23,8
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Conceptual differences and main problems
1. The feasibility of having natural persons as
Ultimate Controlling Unit in the Register
2. The operational criteria to identify the
country of residence of the UCI
3. The definition and treatment of truncated
groups
4. The identification and treatment of changes
in groups’ structure
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1. The feasibility of having natural persons as
Ultimate Controlling Unit in the Register
Requested by the Survey, according to the
Guidelines of the FATS Recommendation
Manual
Conditional for the BR 177/2008 on
availability of information
Feasible only in few
European countries
Strong need for
harmonisation
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3. The operational criteria to identify the
country of residence of the UCI
BR Regulation:
4.12b. Optional: Country of registration of Global GH
4.16. Optional: Country of Global decision centre
FATS:
The place of residency of an UCI should be the country of
registration of it. Not always corresponds to nationality.
Special situations: Multiple minority ownership,
Joint ventures
Special solutions: the characteristic “residency”
is considered separated from the unit itself.
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4. The definition and treatment of truncated
groups
GB
IT
L.U. 1
L.U. 2
L.U. 3
Complex enterprise
For the Italian BR is it ONE Truncated Group or THREE?
ONE: ok, then the C.E. is within the Truncated Group
THREE: then the C.E. cannot be reconstructed?
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2. The identification and treatment of changes
in groups’ structure
•Register and respondent have different time reference
•Different effects of the country of residence of the UCI
on the whole group structure
The whole
group goes
under FR
Part of the group
goes under FR, the
rest under GB
FR
Only the
respondent
goes under FR
GB
GB
GB
IT
FR
IT
IT
IT
IT
FR
IT
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IMPACTS ON EGR
1. The feasibility of having natural persons as
Ultimate Controlling Unit in the Register
 Effect on coherency b/w Registers
2. The operational criteria to identify the
country of residence of the UCI
 Effect on coherency b/w Inward - Outward
The definition and treatment of truncated
groups
 Effect on the definition of the Complex
Enterprises within the Truncated Groups
3. The identification and treatment of changes
in groups’ structure
 Effect on groups’ structure and quality
THANK YOU!