When Does Common Ownership Matter?

75 Pages Posted: 14 Mar 2022

See all articles by Shradha Bindal

Shradha Bindal

University of Kansas - Finance Area

James Nordlund

affiliation not provided to SSRN

Date Written: January 15, 2022

Abstract

We find that the effects of common ownership vary by a firm's product market characteristics. Quasi-random increases in common ownership lead to stronger decreases in R&D and increases in prices and profitability when a firm has similar products. We find that the effects of common ownership are more pronounced for firms with similar (less differentiated) products when competitive threats are high: our results are stronger for industries with lower concentration, higher advertising intensity, or lower investment intensity. Our findings highlight the importance of considering the product market characteristics of a firm and its industry when studying common ownership.

Keywords: common ownership, competition, corporate finance, institutional investors

Suggested Citation

Bindal, Shradha and Nordlund, James, When Does Common Ownership Matter? (January 15, 2022). Available at SSRN: https://ssrn.com/abstract=4009316 or http://dx.doi.org/10.2139/ssrn.4009316

Shradha Bindal (Contact Author)

University of Kansas - Finance Area ( email )

1654 Naismith Drive
Lawrence, KS 66045
United States

James Nordlund

affiliation not provided to SSRN

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