Common Ownership, Competition, and Top Management Incentives

100 Pages Posted: 3 Jul 2016 Last revised: 17 Sep 2021

See all articles by Miguel Anton

Miguel Anton

University of Navarra, IESE Business School

Florian Ederer

Yale School of Management; Yale University - Cowles Foundation

Mireia Gine

IESE Business School, University of Navarra ; The University of Pennsylvania

Martin C. Schmalz

University of Oxford - Finance; CEPR; CESifo; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 3 versions of this paper

Date Written: September 17, 2021

Abstract

We present a mechanism based on managerial incentives through which common ownership
affects product market outcomes. Firm-level variation in common ownership causes varia-
tion in managerial incentives and productivity across firms, which leads to intra-industry
and intra-firm cross-market variation in prices, output, markups, and market shares that is
consistent with empirical evidence. The organizational structure of multiproduct firms and
the passivity of common owners determine whether higher prices under common ownership
result from higher costs or from higher markups. Using panel regressions and a difference-
in-differences design we document that managerial incentives are less performance-sensitive
in firms with more common ownership.

Keywords: Common ownership, competition, managerial incentives, productivity, corporate governance, antitrust

JEL Classification: M12, L13, J33, G32, D21, L21

Suggested Citation

Anton, Miguel and Ederer, Florian and Gine, Mireia and Schmalz, Martin C., Common Ownership, Competition, and Top Management Incentives (September 17, 2021). Ross School of Business Paper No. 1328, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 511/2017, Available at SSRN: https://ssrn.com/abstract=2802332 or http://dx.doi.org/10.2139/ssrn.2802332

Miguel Anton

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Florian Ederer

Yale School of Management ( email )

165 Whitney Avenue
New Haven, CT 06511
United States

HOME PAGE: http://faculty.som.yale.edu/florianederer/

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Mireia Gine

IESE Business School, University of Navarra ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

The University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Martin C. Schmalz (Contact Author)

University of Oxford - Finance ( email )

United States

CEPR ( email )

London
United Kingdom

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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