Reassessing Common Ownership: Corrections to Azar, Schmalz, and Tecu (2018)

26 Pages Posted: 10 Oct 2019

See all articles by Mark Egland

Mark Egland

Analysis Group

Owen Hearey

Analysis Group

Todd Schatzki

Analysis Group, Inc.

Channing Verbeck, Jr

Analysis Group

Date Written: October 2, 2019

Abstract

Azar, Schmalz, and Tecu (2018, “AST”) purport to show a positive relationship between ticket prices and common ownership in the U.S. airline industry. We replicate AST’s results and show that their conclusion is a result of incorrect and unsubstantiated assumptions about:

(1) financial incentives of asset managers,

(2) corporate control and financial incentives during bankruptcy, and

(3) changes in industry structure over time.

After correcting any one of these flawed assumptions, we conclude there is no statistically significant association between ticket prices and common ownership.

Keywords: Common Ownership, Airlines, Competition, Asset Managers

JEL Classification: G30, G34, G38, G23

Suggested Citation

Egland, Mark and Hearey, Owen and Schatzki, Todd and Verbeck, Jr, Channing, Reassessing Common Ownership: Corrections to Azar, Schmalz, and Tecu (2018) (October 2, 2019). Available at SSRN: https://ssrn.com/abstract=3463231 or http://dx.doi.org/10.2139/ssrn.3463231

Mark Egland

Analysis Group ( email )

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Owen Hearey

Analysis Group ( email )

333 South Hope Street, 27th Floor
Los Angeles, CA 90071
United States
2138964500 (Phone)

Todd Schatzki (Contact Author)

Analysis Group, Inc. ( email )

111 Huntington Avenue
10th floor
Boston, MA 02199
United States

Channing Verbeck, Jr

Analysis Group ( email )

333 South Hope Street
Los Angeles, CA 90071
United States

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