Does common ownership really increase firm coordination?

By Katharina Lewellen, Michelle René Lowry. Journal of Financial Economics, 2020

169 citations recorded by the source corpus.

A growing body of evidence concludes that common ownership caused cooperation among firms to increase and competition to decrease. We take a closer look at four approaches used to identify these effects. We find that the effects the literature has attributed to common ownership are caused by other factors, such as differential responses of firms (or industries) to the financial crisis. We propose a modification to one of the previously used empirical approaches, which is less sensitive to these issues. Using this to re-evaluate the link between common ownership and firm outcomes, we find little robust evidence that common ownership affects firm behavior.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/12e46b17ec9e3efd1270b759fd5a0c914b9843ea

Citations in the corpus

• Common ownership and competition in product markets (2021, unknown): “Some institutions, e.g. passive index funds, are less likely to engage and take strategic actions that facilitate coordination among portfolio-firm managers, e.g., see Lewellen and Lewellen (2018), Bebchuk, Cohen, and Hirst (2017), and Bebchuk and Hirst (2018).”