Overlapping Ownership Along the Supply Chain

49 Pages Posted: 21 Nov 2016 Last revised: 3 Jan 2022

See all articles by Kayla Freeman

Kayla Freeman

University of Georgia, Terry College of Business, Department of Finance

Date Written: December 31, 2021

Abstract

I find overlapping institutional ownership (OIO) in a customer and supplier increases the duration of their supply chain relationship. I exploit two quasi-natural experiments creating plausibly exogenous variation in OIO – a large mutual fund scandal and financial institution mergers – to provide causal evidence of OIO improving relationship survival rates. These longer relationships appear to be value-enhancing, since OIO also improves supply chain valuations and innovation outcomes, suggesting that OIO helps reduce holdup costs. OIO has stronger effects on pairs facing greater information asymmetry, suggesting an information-sharing mechanism. Overall, my results show that OIO strengthens vertical relationships by alleviating holdup problems.

Keywords: Supply chain holdup, Overlapping ownership, Information asymmetry, Institutional investors

JEL Classification: L14, M41, G23, G32

Suggested Citation

Freeman, Kayla, Overlapping Ownership Along the Supply Chain (December 31, 2021). Kelley School of Business Research Paper No. 16-84, Available at SSRN: https://ssrn.com/abstract=2873199 or http://dx.doi.org/10.2139/ssrn.2873199

Kayla Freeman (Contact Author)

University of Georgia, Terry College of Business, Department of Finance ( email )

Brooks Hall
Athens, GA 30602-6254
United States

HOME PAGE: http://https://sites.google.com/site/kaylafreemanfinance/home

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