Common Ownership Concentration and Corporate Conduct

34 Pages Posted: 22 Jan 2018

See all articles by Martin C. Schmalz

Martin C. Schmalz

University of Oxford - Finance; CEPR; CESifo; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 3 versions of this paper

Date Written: January 2018

Abstract

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: Antitrust, control, industry concentration, network, objective of the firm, ownership, shareholder unanimity

JEL Classification: D21, D22, G10, G30, G32, G34, J41, K21, L10, L16,

Suggested Citation

Schmalz, Martin C., Common Ownership Concentration and Corporate Conduct (January 2018). CEPR Discussion Paper No. DP12598. Available at SSRN: https://ssrn.com/abstract=3106801

Martin C. Schmalz (Contact Author)

University of Oxford - Finance ( email )

United States

CEPR ( email )

London
United Kingdom

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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