Linking BR across agencies domains and among countries Questions incurred & solutions proposed through European Pro

1. Linking BR across agencies domains and among countriesQuestions incurred & solutions proposed through European Profiling

2. ESSnet on « profiling large and complex MNEs » • Objectives and choosen way slides 3 to 6 • Cluster and perimeters: what differences?slides 7 & 8 • Appearances of MNEs and “statistics” slide 9 • Ability to produce structural statistical data slides 10 to 15 • Consultation, dissemination and future work slide 16

3. ESSnet on « profiling large and complex MNEs »the main objectives of the ESSnet Profiling project • describe consistently the same MNEs in the EU countries => “enterprises” linked between countries through the EGR • support efficient data collection in SBS, FATS, FDI & if possible in STS => a system of statistical units for all statistical agencies • for direct dissemination and for indirect use (National accounts etc) => most statistical domains concerned -

4. ESSnet on « profiling large and complex MNEs »the choosen way: move towards economic definition of enterprises Profiling is a method: • to analyse the • legal – operational and – accounting • structure of an enterprise group • in order to • establish the statistical units within that group and • their links and • the most efficient structures • for the collection of statistical data

5. ESSnet on « profiling large and complex MNEs »the choosen way: use economic information coming from the businesses Profiling : • uses the MNEs information system for accounting consolidation • takes the operating segment as a starting point for delineation of economic “enterprises”(IFRS8), but can differ at the end • with the result that an enterprise is (can be): • a single legal unit (if independant) • an enterprise group(i.e a set of legal unit under common control) • a part of an enterprise group. • as “enterprises” are organisational units, their autonomy (in decision making for allocation of their current resources) is an essential characteristic. • => The delineation, list, name of the “enterprises” are built with and agreed by the MNEs.

6. ESSnet on « profiling large and complex MNEs »the choosen way: stop trying to define enterprise by bottom-up methods • as - that is an organisational unit - producing goods and services (for the market) - … with a certain degree of autonomy in decision making - especially for the allocation of its current resources

7. ESSnet on « profiling large and complex MNEs »Global cluster and « perimeter » of consolidation • Is the profiled MNE = consolidated MNE ? • Both cases include: • direct or indirect majority of interest • other types of control • de jure (legal prescriptions, agreements between shareholders etc) • de facto (e.g effective permanent majority) • and exclude statutory limited or temporary suspended voting rights or the effect of specific (golden) minority shares No geographic limitation (indirect can be through foreign affiliates) => cooperation between EU NSIs is necessary

8. ESSnet on « profiling large and complex MNEs »Global cluster and « perimeter » of consolidation • The amendments of the EU BR recommandation manual, that ensure the MNEs to be mutually exclusive: • Consider the highest level of consolidation (the GGH or the UCI level; always the highest “diplayed” level) • Include only the “entirely integrated units”(“proportional” integration disappears in 2013) • Add the controlled but not integrated units (the “too small”) (we miss a concrete criterium and find no way to reintegrate them) • Discount temporary links (now done most of the time by accountants) • Our remarks in grey + work on “investment funds” (private equity) that we do not consider as MNEs + work on “subgroups” • Main conclusion: differences lessening between accounts and our wishes.

9. ESSnet on « profiling large and complex MNEs »MNE appearances, translation in the statistical world • Can we limit us to general methods? (No) or do we need a typology of MNEs? (Yes) • the subsidiary principle => each of the 500 MNE to UCI country (on 27 , 31 etc) • the lack of standards for displayed accounting tables • => try to include typology + profiling strategy • A purely pragmatic typology => necessity of permanent up-dates / an insight on management principles (?) => permanence of the typology ? • A list of scale effects supposed to lead to types of MNEs / a list of regional-local conditions / resulting effects: now testing the emergence of the hoped typology.

10. ESSnet on « profiling large and complex MNEs »Ability of the « enterprise » unit to produce structural statistical data • For most EU statisticians, a large change to the usual way: from surveying SUs (statistical units), predetermined in the BR, to a dialog with MNEs using the common business accounting language • Leads to necessary pre-checks, from BR staff: • Are the variables we need available in the MNE information system at the level of the “enterprises”? • If yes, are they economically significant? • The checkings are to be made at EU level (no more at national level): • are there theoretically consistent data all over the EU? • will we be able to gather them consistently from the truncated national parts of the “enterprises”?

11. ESSnet on « profiling large and complex MNEs »Ability of the « enterprise » unit to produce structural statistical data • What are the main variables to check, (statisticians view)? - the usual BR variables (to identify, assess the continuity and link different kind of units, split the populations and stratify); - the SBS variables; as such and as one of the main providers of NA - the NA themselves - + attention to outward-FATS statistics, that operate at the MNE level on “enterprises” • How can the MNEs work on checkings (the business view)? • They ask for a priority list • They want this list to be common to all European countries • They ask for common questionnaires for priority variables • They know better accounting data than any other • => priority to components of value added (accounting shape), the “core variables”

12. ESSnet on « profiling large and complex MNEs » Core variables: the highest priority to test ability for SBS & NA:

13. ESSnet on « profiling large and complex MNEs » Core variables: reconciliation with the P&L

14. ESSnet on « profiling large and complex MNEs » Core variables: where to find the right variables in the financial statement?

15. ESSnet on « profiling large and complex MNEs » Core variables: what if a complete balance-sheet for the enterprise?

16. ESSnet on « profiling large and complex MNEs » consultation, dissemination and future work • Our project lasts until the end of 2013, now mainly on testing • We try to be in constant coordination with: • the EGR methodological studies • an ESSnet project on Consistency • the EU studies on globalisation (e.g on value chains) and on MNEs • the Eurostat groups on BR, SBS, FATS, NA • other interested countries (US, Canada, China …) • international bodies such as OECD, UNECE, etc • We will appreciate your comments: pierre.teillet@insee.fr ----------------------------------------------------------------------- Thank you for your attention