The algorithm above traces every link of state participation once the starting node is correctly determined as a public authority. However, we identified cases where ORBIS incorrectly classified a governmentrelated entity as a corporation, and it was therefore not included in the algorithm (see decision tree in Figure 7). To correct this, we analyzed the national legal definition for each country to identify additional starting nodes that needed to be included in the exercise.<sup>38</sup> These additional starting nodes were included in the algorithm to map additional subsidiaries and firms that were not identified in the first run. Another tool that we employed to minimize the measurement error consisted of using the information from the GUO variable described in section 2 to identify potential additional entities as starting nodes. Inclusion of GUO variable also addresses cases where a firm is linked to a single public authority through multiple ownership “paths” and each individual path does not exceed the threshold, but in aggregate the public authority holds shares above the threshold.

The iterative use of the algorithm to identify SOEs in ORBIS, combined with additional information from the supplementary database yields an unprecedented coverage of SOEs. The application of the algorithm to ORBIS may fail in cases where the entity at the starting node is wrongly classified or not even included at all in ORBIS, or where some ownership link is not recorded. We used the supplementary database to complement the entities identified through the algorithm and then applied the algorithm to the new set of entities identified. This iterative process helps retrieve a universe of SOEs larger than previously identified in many countries.<sup>39</sup> In sum, the SOE registry for a specific country is built through five complementary steps to minimize the measurement error. The full list of SOEs in a country (SOE registry) is built through a combination of (i) ownership trees run through the public authorities identified in the ORBIS ‘entities file’, (ii) ownership trees built on additional entities identified as government-owned firms through the review of the national legal form, (iii) ownership trees built on additional nodes identified through the global ultimate owner information, (iv) list of firms that satisfy the SOE definition in supplementary and official databases (e.g., MoF), and (v) the latter list of companies’ ownership trees (if the firms are in ORBIS).

# 4.1.2 Incorporating Financial, Economic Performance, and Governance Variables

Once the registry of SOEs is completed, the second stage consists of complementing the data with financial and corporate governance information. For this purpose, we used the ORBIS interface and the SOE Supplementary Databases. It is important to note that ORBIS presents information on consolidated and unconsolidated statements of firms. As explained by the database manual from Bureau van Dijk (ORBIS, 2011), consolidated accounts are composed of financial information for the mother company and all its subsidiaries. Unconsolidated accounts correspond to financial information of just the specific company, excluding the financials of its subsidiaries. (Cusolito, 2021) shows that some countries report only consolidated accounts, others report only unconsolidated accounts, and others report both in ORBIS.

Given that the BOS database provides the full ownership structures, unveils all subsidiaries, and presents the information where each company is the unit of observation, we focus on collecting unconsolidated financial accounts of domestic SOEs to avoid any double counting issues. Since the BOS database includes all separate legal entities including those that can be subsidiaries of other companies in the database, we

> 38 Close coordination with the regional and country-level experts across GPs and across EFI were key to identify these set of firms based on the national legal forms.

> 39 Some cases, the algorithm could not find the specific company because it referred to non-corporatized forms, where firms did not report specific shareholding information. To minimize this measurement error, external and complementary databases, as mentioned in section 3, were essential to cross-check the findings of the ownership trees and complement as needed. New firms identified through external sources were also included as starting nodes in case those could provide further subsidiaries in ORBIS.

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