Overlapping Ownership Along the Supply Chain

Journal of Financial and Quantitative Analysis, forthcoming

55 Pages Posted: 21 Nov 2016 Last revised: 26 Sep 2023

See all articles by Kayla Freeman

Kayla Freeman

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

Date Written: September 22, 2023

Abstract

I find overlapping institutional ownership (OIO) in a customer and supplier increases the duration
of their supply chain relationship. Results are stronger when vertical holdup is more severe. A
quasi-natural experiment around mergers of financial institutions provides causal evidence of OIO
improving relationship survival rates. Concurrent with longer-lived relationships, valuations and
innovation increase, consistent with OIO effects on relationship longevity being beneficial. I find
evidence of OIO strengthening relationships via an internalization channel: With more OIO,
partners cooperate more, with the supplier extending more trade credit. Overall, results indicate
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 (September 22, 2023). Journal of Financial and Quantitative Analysis, forthcoming, 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

Brooks Hall
Athens, GA 30602-6254
United States

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

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