Common Ownership and Entrepreneurship
AEA Papers and Proceedings
10 Pages Posted: 9 Mar 2021
Date Written: January 8, 2021
We complement the literature on common ownership by presenting two new observations from entrepreneurial startups. First, given the increase in common ownership of startups by VC investors, inclusion of high-value startups in standard common ownership measures may actually increase aggregate measures of common ownership. Second, we suggest that even if public-firm common ownership leads to collusive inefficiency and higher prices in the short-term, it may also create opportunities for entry of innovative high-growth startups. Consistent with this, we document that entrepreneurial activity and common ownership of startups tends to be higher in industries with higher common ownership among public firms.
Keywords: Entrepreneurship, Startups, Private Firms, Corporate Governance, Common Ownership, Competition, Innovation, Entry
JEL Classification: G32, G24, L11, L41, O31
Suggested Citation: Suggested Citation