Common Ownership, Competition, and Top Management Incentives
78 Pages
Posted: 3 Jul 2016
Last revised: 9 Aug 2017
IESE Business School, Universidad de Navarra
Yale School of Management; Yale University - Cowles Foundation
IESE Business School, University of Navarra ; The University of Pennsylvania
University of Michigan, Stephen M. Ross School of Business
There are 2 versions of this paper
Date Written: June 1, 2017
Abstract
We show that managers have stronger financial incentives to compete against rivals when an industry’s firms tend to be controlled by shareholders with concentrated stakes in the firm, and relatively few holdings in competitors. Conversely, wealth-performance sensitivities are reduced when there is more common ownership. We exploit quasi-exogenous variation in common ownership from a mutual fund trading scandal to support a causal interpretation. These findings inform a debate about the objective function of the firm.
Keywords: Common ownership, competition, CEO pay, management incentives, governance
JEL Classification: D21, G30, G32, J31, J41
Suggested Citation:
Suggested Citation
Anton, Miguel and Ederer, Florian and Gine, Mireia and Schmalz, Martin C., Common Ownership, Competition, and Top Management Incentives (June 1, 2017). 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
