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Common-Ownership Concentration and Corporate Conduct

Annual Review of Financial Economics, Vol. 10, December 2018

31 Pages Posted: 5 Oct 2017 Last revised: 28 Nov 2017

Martin C. Schmalz

University of Michigan, Stephen M. Ross School of Business; CEPR; CESifo

Multiple version iconThere are 2 versions of this paper

Date Written: November 26, 2017


The question of whether and how partial common-ownership links between strategically interacting firms affect firm behavior has been the subject of theoretical inquiry for decades. Since then, consolidation and increasing concentration in the asset-management industry has led to more pronounced common ownership concentration (CoOCo). Moreover, recent empirical research has provided evidence consistent with the literature's key predictions. The resulting antitrust concerns have received much attention from policy makers worldwide. However, the implications are more general: CoOCo affects the objective function of the firm, and therefore has implications for all subfields of economics studying corporate conduct -- including corporate governance, strategy, industrial organization, and all of 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

Schmalz, Martin C., Common-Ownership Concentration and Corporate Conduct (November 26, 2017). Annual Review of Financial Economics, Vol. 10, December 2018. Available at SSRN:

Martin C. Schmalz (Contact Author)

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