Common Ownership and Competition in Product Markets

84 Pages Posted: 10 May 2017 Last revised: 30 Jan 2019

See all articles by Andrew Koch

Andrew Koch

University of Pittsburgh - Finance Group

Marios A. Panayides

University of Cyprus - Department of Accounting and Finance; University of Pittsburgh - Katz Graduate School of Business

Shawn Thomas

University of Pittsburgh - Katz Graduate School of Business

Date Written: December 20, 2018

Abstract

This paper empirically investigates the relation between common institutional ownership of the firms in an industry and competition among firms in the industry. We find that common ownership is neither robustly positively related with industry profitability or output prices nor robustly negatively related with measures of non-price competition, as would be expected if greater common ownership encouraged product market rivals to compete less aggressively. This conclusion holds regardless of industry classification choice, common ownership measure, profitability measure, non-price competition proxy, or model specification. Our point estimates are close to zero with tight bounds, and we can statistically reject even modestly-sized economic effects. We conclude that antitrust restrictions seeking to limit intra-industry common ownership are not currently warranted.

Keywords: Common Ownership, Governance, Competition, Horizontal Merger

JEL Classification: G34, L13, L41

Suggested Citation

Koch, Andrew and Panayides, Marios A. and Thomas, Shawn, Common Ownership and Competition in Product Markets (December 20, 2018). 29th Annual Conference on Financial Economics & Accounting 2018. Available at SSRN: https://ssrn.com/abstract=2965058 or http://dx.doi.org/10.2139/ssrn.2965058

Andrew Koch

University of Pittsburgh - Finance Group ( email )

372 Mervis Hall
Pittsburgh, PA 15260
United States

Marios A. Panayides

University of Cyprus - Department of Accounting and Finance ( email )

University of Cyprus
P.O. Box 20537
Nicosia, CY-1678
Cyprus

University of Pittsburgh - Katz Graduate School of Business ( email )

372 Mervis Hall
Pittsburgh, PA 15260
United States

Shawn Thomas (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

246 Mervis Hall
Pittsburgh, PA 15260
United States
412-648-1648 (Phone)
412-648-1693 (Fax)

HOME PAGE: http://www.pitt.edu/~shthomas/index.htm

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