Global Common Ownership, Control, and Market Power

Abstract

I study the simultaneous ownership of equity of competing companies by the same investor, i.e., common ownership, in 39,867 publicly listed corporations in 125 countries between 2000-2020. I construct a global data set to document the prevalence of common ownership in multiple forms, including common ownership by asset managers, crossholdings between competitors, and business groups. Almost half of the world's publicly listed firms have a common owner, and both the measures of common ownership and the types of common owners are heterogeneous across countries. Then, I study the relationship between common ownership and market power. In the pooled sample, firm markups increase with the size of common ownership. When direct shareholdings are analysed, common ownership is more prevalent in Europe and the United States. Product market regulation does not seem to reduce the anti-competitive effects of common ownership. When ultimate ownership is included, we observe more concentration of ownership in Asia and outside Western Europe, but less common ownership within an industry and more common ownership across industries. As a result, common ownership presents less of a threat to competition.

Keywords: Common ownership, corporate control, asset management, competition, corporate governance, antitrust policy

JEL Classification: D43, G23, G34, L13, L41