Who Controls the Defence Industry?
A leximetric dataset and index assessing state control versus ownership in 107 global defence firms, featuring the novel State Influence Index.
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OVERVIEW
Who Controls the Defence Industry? is a leximetric dataset and research tool that examines the governance and state control of 107 of the world’s largest defence companies. It provides a novel State Influence Index (SII) and a State Restraint Index to quantify how governments exert power through legal and governance mechanisms, even when they hold little or no equity. This resource is particularly relevant for finance professionals assessing corporate governance, sovereign risk, and the unique structural dependencies in the global defence market.
Organisation behind the tool
The tool was developed by researchers associated with the European Corporate Governance Institute (ECGI) and Bruegel. The dataset is derived from Large Language Model (LLM) extractions of annual reports and hand-coding by the project authors.
What the tool does
The tool provides structured data and indices covering:
- The State Influence Index (SII): Aggregates voting power, voting enhancements, board appointment rights, and veto rights.
- The State Restraint Index: Measures voluntary self-limitation by states to attract private capital.
- Leximetric data for 107 companies across 24 countries, drawn from the SIPRI Top 100 (2022–2024).
- Analysis of governance architectures, including national subsidiary partitioning and implicit state leverage over domestic family-controlled entities.
Target audience
The primary audience includes finance professionals, institutional investors, policymakers, and academic researchers specialising in corporate governance, political economy, and national security.
Relevance to finance professionals
- Risk assessment – Helps investors identify hidden state influence and ‘golden share’ mechanisms that may impact shareholder rights or exit strategies.
- ESG analysis – Provides metrics on corporate governance and state involvement in the ‘S’ and ‘G’ pillars of ESG reporting.
- Investment context – Offers insights into the bilateral monopolies and asset specificity inherent in defence industry investments.
- Market insights – Explains how cross-border cooperation and national security agreements affect the operational autonomy of global defence firms.
