threshold of state ownership to 10%. This feature provides flexibility to assess and filter different subsets of companies (e.g., majority, blocking minority vs. minority) and run robustness checks across firms, but also to better understand how the nature and variation in ownership links can be important to understand firms’ performance and the types of sectors where those are involved. Fifth, it covers both national and subnational governments, allowing to analyze how municipal governments can also influence markets, which is particularly relevant for decentralized economies. Sixth, it covers all relevant economic sectors with potential implications in the markets beyond traditional infra and network sectors offering a full overview of the state footprint even in commercial sectors without restricting by number of firms or any threshold in size. Last, the database compiles, complements, and validates information beyond ORBIS using official sources and government counterparts, minimizing the omission and measurement errors found in ORBIS.

Since control cannot be known ex ante, this paper proposes a definition of SOEs which allows to identify SOEs, based on the quantitative measurement of the state participation in firms, at different levels of ownership structure. The proposed SOE definition builds on the International Monetary Fund’s (IMF) Government Finance Statistics Manual 2014 definition of SOEs. The concept of government control is at the heart of the definition of SOEs. As documented by the OECD, statistics show a tendency of governments to partially divest from SOEs up to a point where firms are no longer considered as SOEs according to national definitions, while still holding non-trivial, controlling stakes (OECD, 2009). Since it is impossible to identify state control without verifying each individual company’s ownership structure, including the presence of golden (veto power) shares, we propose to use 10% as a proxy for state control. The use of a comparatively low ownership threshold allows for sensitivity and comparative analyses of state footprint for firms at multiple ownership thresholds levels, including the 25% and 50% commonly used thresholds and as well as cases of minority state control below 25%.

The proposed methodology reconstructs the full ownership structure linking each firm to the state as its ultimate shareholder, including foreign registered firms. For the most part and in contrast to the methodology presented here, existing SOE databases do not capture firms indirectly owned by the state (i.e., subsidiaries of state-owned enterprises), and only a limited number of them capture SOEs at the subnational level. The Global BOS database collects information about firms directly and indirectly linked to the state, mapping out all the subsidiaries of a government-controlled firm operating inside and outside each country with the help of a novel algorithm.

The database adopts a disaggregated sector taxonomy developed by Dall’Olio et. al. (2022) to classify SOEs based on industries’ inherent technological features and market failures. There is a large heterogeneity of sectors in which SOEs are present and efficiency rationale for SOE participation in these sectors varies. The taxonomy provides a tool to assess the economic rationale for SOE presence and also serves to triage SOE interventions.<sup>4</sup> The three categories of classification of sectors are: natural monopolies, partially contestable sectors, and competitive sectors. The methodology to construct the sector taxonomy in Dall’Olio et. al. (2022) is complementary to this paper.

The Global BOS database leverages ORBIS, the proprietary firm-level data from Bureau van Dijk, as a primary source to construct country-level SOE data sets.<sup>5</sup> As pointed out by (Kalemli-Ozcan, Sorensen, Villegas-Sanchez, Volosovych, & Yesiltas, 2015), ORBIS is a good starting point to construct a firm-level data set because it provides administrative data for over 130 million entities worldwide covering all sectors

> 4 For the alternatives of SOE reform and also different approaches based on the type of sector, please also refer to the CPSD SOE Knowledge note (Sanchez-Navarro, Goodwin, & Kikeri, SOE CPSD Knowledge note, 2021) and Private sector toolkit (WB, forthcoming). 5 Also known as AMADEUS product for the ECA region.

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