Common-Ownership Concentration and Corporate Conduct
Annual Review of Financial Economics, Vol. 10, December 2018
40 Pages Posted: 5 Oct 2017 Last revised: 18 May 2018
Date Written: May 10, 2018
The question of whether and how partial common-ownership links between strategically interacting firms affect firm objectives and behavior has been the subject of theoretical inquiry for decades. Since then, the growth of intermediated asset management and consolidation in the asset-management sector has led to more pronounced common ownership links at the beneficial-owner level. Recent empirical research has provided evidence consistent with the literature's prediction that common ownership concentration (CoOCo) can affect product market outcomes. The resulting antitrust concerns have received worldwide attention. However, because CoOCo can change the objective function of the firm, the potential implications span all fields of economics that involve corporate conduct, including corporate governance, strategy, industrial organization, and financial economics. This article connects the papers establishing the theoretical foundations, reviews the empirical and legal literatures, and discusses challenges and opportunities for future research.
Keywords: ownership, control, network, industry concentration, antitrust, objective of the firm, shareholder unanimity
JEL Classification: D21, D22, G10, G30, G32, G34, J41, K21, L10, L16, L21, L40, L41, L42
Suggested Citation: Suggested Citation