Common Ownership, Common Information Environment?

61 Pages Posted: 17 Jul 2019

See all articles by In Ji Jang

In Ji Jang

Bentley University - Department of Finance

Mahdi Mohseni

Texas A&M University - Department of Finance

Sugata Roychowdhury

Boston College

Ewa Sletten

The Ohio State University

Date Written: May 2019


We examine the influence of common ownership on commonalities in the information environment. Specifically, we study commonalities in financial statements and in the actions of key agents such as financial analysts and firm managers who contribute and respond to the information environment. Using a differences-in-differences research design centered on the mergers of financial institutions, we find that an increase in common ownership leads to increased comparability of financial statements issued by commonly owned firms. An increase in common ownership also leads to higher likelihood of filing restatements, as greater comparability and potentially greater correlation of economic fundamentals uncover inconsistencies, errors and irregularities in reporting, particularly in the presence of shared auditors. In addition, common ownership leads to more shared coverage by financial analysts. Analysts’ earnings expectations become more correlated across peer firms, but analysts are also more likely to revise their expectations when peer firms issue earnings guidance. Finally, we shed light on the real consequences of such changes in the information environment. Managers become more likely to use the information captured in peer firms’ stock price when making investment decisions following an increase in common ownership.

Keywords: Common ownership, institutional investors, financial statement comparability, restatements, analyst coverage, analyst forecast revisions, analyst forecast errors, investment sensitivity, peer firm learning

JEL Classification: D80, D92, G11, G14, G20, G23, G30, G32, G34, L10, L40, M20, M40, M41

Suggested Citation

Jang, In Ji and Mohseni, Mahdi and Roychowdhury, Sugata and Sletten, Ewa, Common Ownership, Common Information Environment? (May 2019). Available at SSRN: or

In Ji Jang

Bentley University - Department of Finance ( email )

175 Forest Street
Waltham, MA 02154
United States

Mahdi Mohseni (Contact Author)

Texas A&M University - Department of Finance ( email )

360N Wehner Building, 4218 TAMU
College Station, TX Texas 77843
United States

Sugata Roychowdhury

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-1764 (Phone)

Ewa Sletten

The Ohio State University ( email )

Fisher Hall
2100 Neil Avenue
Columbus, OH 43210
United States
6142922451 (Phone)

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