Common Ownership and Entrepreneurship

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

Eldar, Ofer and Grennan, Jillian, Common Ownership and Entrepreneurship (January 8, 2021). AEA Papers and Proceedings, Duke Law School Public Law & Legal Theory Series No. 2021-25, Available at SSRN: https://ssrn.com/abstract=3762218 or http://dx.doi.org/10.2139/ssrn.3762218