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A numbers tale: ORBIS & private company financials around the world

Published April 19, 2017 by Mark Bodnar

<My apologies in advance: this post is full of numbers. It's hard to avoid -- the numbers tell quite a story... one that I think is worth hearing.>

I was just browsing through the help files in our ORBIS database (that's what a bus/econ librarian does for fun -- seriously!) when I came across this amazing spreadsheet.  (Click to download and open the .xlsx file.)

Screen capture of part of a spreadsheet showing the ORBIS coverage by country. Click to download the spreadsheet.

Okay, I'll freely admit that not everyone will see the amazingness behind those numbers.  Let me explain...

The sheet outlines the coverage of ORBIS across different countries.  More specifically, it tells us the depth of the coverage of companies based in almost every country in the world.  That is, it lists how many companies ORBIS is tracking in each country, and how much information it has on those companies (detailed, limited, or no financials).  

Still with me? Great! Here come the numbers...

  • ORBIS has the information on a truly huge number of companies: over 214 million when you include branches.  That's not comprehensive, but it's pretty darn good.
     
  • Of those 214 million+, ORBIS has the detailed financials of a bit more than 20 million companies. That's around 9 or 10%.  

This is not completely unexpected: the vast majority (over 99%) of companies globally are privately held, not publicly traded, and we all know that only publicly traded companies are required to release their financials... so we shouldn't be surprised that it's hard to get financials for at least 90% of companies... right?

Well, no. Not really.

Let's take a closer look at the numbers: 

  • black and white image of a globeOf the 18 million North American companies covered, only about 35,000 have detailed financials.  That's about 0.19%. Those would be from the relatively rare cohort of publicly traded companies we mentioned earlier.  The other 99.81% of the companies are privately held, and in North America that means that they are under almost no obligation to reveal their financials.
      
  • Compare that to Western Europe, where about 10 million of their 30 million companies in the database have detailed financials.  <pause>  That's 33%... compared to 0.19% for those in North America. Hmmm...
     
  • Eastern Europe is doing even better, with detailed financials provided for about 38% of the 15.6 million companies covered.
     
  • Not all regions are as easy to research, of course. Oceania (incorporating AUS, NZ, and many wonderful island nations) is also down around 0.2%, largely because there are detailed financials for only about 0.15% of the companies based in the biggest country in the region, Australia.

Let's take a closer look at the country level data.  

  • Way up at the top of the list is Thailand -- over 92% of the 565,000 Thai companies in the database have detailed financials available.  
     
  • Also up above 50% are the Philippines (65%), Iceland (64%), Portugal (56%), and Malaysia (50%).  In fact, we have to scroll through more than 40 countries before we get to the first one that has detailed financials for less than 10% of the companies covered, and more than 100 countries before that number drops below 1%, at which point we're finally getting down to the level of places like Canada, the USA, Turkmenistan, and El Salvador. <pause>

I should repeat that this database isn't comprehensive. It is, however, pretty substantial. The publishers really do want to include as much information on as many companies as they can, which means that if the information was easily available, they would almost certainly include it.  

OK, so every story has a moral, right? This one has a few...

1. Researching privately held companies really is hard since they may not have to release their financial data.

2. But not all countries are the same! In some countries, a substantial percentage of the private companies do have to make their data available... which means that... 

  • If you happen to be researching companies in Morocco (37%) or Colombia (34%), you may have a much easier time than if you are researching most Canadian or American companies.
     
  • You can sometimes use the financial ratios from private companies in other parts of the world as benchmarks for private companies in less research-friendly areas like Canada.
     
  • From a public policy perspective, the choice to not have at least major private companies publish their data isn't written in stone and countries that insist on broader disclosure do not spontaneously implode.  In fact, some (e.g., UK, Sweden, Germany...) are actually doing reasonably well despite having information floating about where just about anybody (you!) can find it.

3.  And, finally, here's my ulterior motive moral... to let you know about the amazing power of one of the many databases available for SFU researchers: ORBIS (and its slightly-easier-to-use sibling, MINT Global).  Enjoy!

-- MarkB
~~~~~~~~~~~~~~~~
Mark Bodnar
Business & Economics Librarian
mbodnar@sfu.ca

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