Does Common Ownership Really Increase Firm Coordination?

48 Pages Posted: 4 Mar 2019

See all articles by Katharina Lewellen

Katharina Lewellen

Dartmouth College - Tuck School of Business

Michelle Lowry

Drexel University

Date Written: February 17, 2019

Abstract

A growing body of evidence concludes that common ownership has caused cooperation among firms to increase and competition to decrease. We take a closer look at four different approaches the literature has used to identify these effects. We find that the effects the literature has attributed to common ownership are caused by other factors, such as differential responses of firms (or industries) to the financial crisis. We propose a modification to one of the previously used instruments, which is less sensitive to these issues. Using this to re-evaluate the link between common ownership and multiple firm outcomes, we find little robust evidence that common ownership affects firm behavior.

Keywords: common ownership, institutional investors, corporate governance

Suggested Citation

Lewellen, Katharina and Lowry, Michelle B., Does Common Ownership Really Increase Firm Coordination? (February 17, 2019). Tuck School of Business Working Paper No. 3336343. Available at SSRN: https://ssrn.com/abstract=3336343 or http://dx.doi.org/10.2139/ssrn.3336343

Katharina Lewellen

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Michelle B. Lowry (Contact Author)

Drexel University ( email )

Philadelphia, PA 19104
United States
215-895-6070 (Phone)

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