needed to trace its relationship back to the government. This module also provides a novel indicator denoted as multiple links to denote whether more than one public entity (e.g., different ministries) act as shareholders in the company on behalf of the government and therefore it can provide more than one ownership path that connects the firm to the government.<sup>47</sup> For indirectly owned firms, the number of layers can go from two (e.g., Bangladesh, Cabo Verde) to as deep as thirteen levels (e.g., the Russian Federation). Private firms with no ultimate links to public authorities or governments are not included in the data set.

The third module collects economic and financial performance variables focused on employment, operating revenues (turnover), and net profit/losses (after tax). Researchers use these variables to analyze SOE performance, profitability, and contribution to the economy. However, in many countries, data on SOE income statements and balance sheets are hard to obtain. The global BOS database provides information on total employment (permanent and temporal workers), operating revenues and net profit/loss after tax. The financial information is provided in unconsolidated terms (i.e., parent company reporting as single entity and subsidiaries reporting their respective operations) to avoid potential double counting issues.

The fourth module contains variables related to corporate governance, including the reporting line ministry, level of government, audit status, among others. This final module identifies which firms are owned by the central or subnational (e.g., municipal governments), the ministry line and oversight entity of the SOE, the sectoral regulator, and the audit status.

# 6. Application: New Facts on SOEs Based on the BOS Database

In this section, we present descriptive statistics of SOEs for a subsample of countries in the database. In particular, we characterize SOE patterns for employment, revenues, and state participation by region, type of contestability, type of ownership, age, and size. In the BOS database, employment is measured as the number of workers that are employed by the SOE. Operating revenues is measured as the income that is generated by the SOE from business operations. As explained in section 2.2.2, the BOS database provides information on the shareholding percentages between the government and their direct subsidiaries and between directly owned SOEs and their indirect subsidiaries (and between subsidiaries of those subsidiaries). Using this information, we classify firms into three groups of state participation: majority owned SOEs (shareholding percentages higher than 50%), SEOs with blocking minority participation (shareholding percentages between 25% and 50%) and SOEs with minority participation (shareholding percentages between 10% and 25%). A firm is considered an SOE with majority government participation if the shareholding percentage is above 50% for all ownership layers that link it to the government. If at any ownership layer, the shareholding percentage between two firms is less than 50%, then all the firms beyond that layer are not considered as SOEs that have a majority government participation.<sup>48</sup> In the same manner, a firm is an SOE with blocking minority participation if the shareholding percentage is above 25% for all ownership layers that link it to the government, but less than 50% for at least one of the ownership layers that link it to the government. Last, a firm is an SOE with minority state participation if the shareholding percentage is above 10% for all ownership layers that link

> 47 For instance, in Angola, the Banco de Poupanca e Credito is owned 75% directly by the Government of Angola, and 15% is owned indirectly by the national social security. The ownership module spells out these different relationships to understand the different paths that connect the firm with the government as a shareholder.

> 48 For example, consider a group of SOEs (firms A, B, and C) that are linked to a government public authority (PA) in the following way: PA (X%) - >A (Y%) -> B (Z%) -> C. For companies A, B, and C to be considered all majority owned, then X%, Y%, and Z% should be all greater than 50%. Suppose that X% was greater than 50%, while Y% was less than 50%, then company A would still be considered an SOE with majority participation while company B would not. In addition, company C, regardless of the value of Z%, would not be considered an SOE with majority participation, given that its direct owner does not satisfy the criteria of a shareholding percentage above Y%.

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