Academic Research

Global Common Ownership, Control, and Market Power 

Working Paper available at SSRN

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 i) common ownership by asset managers; ii) crossholdings between competing corporations; iii) 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. I study the relationship between common ownership and market power. In the pooled sample, firm markups increase with the size of common ownership. This increase is even higher when common ownership across industries is accounted for. When direct shareholdings are analysed, common ownership is more prevalent in Europe and the U.S., mainly attributable to direct ownership by asset managers. 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 in those countries we observe less common ownership within an industry and more common ownership across industries. As a result, common ownership in those countries presents less of a threat to competition.

Presentations: AFA PhD Poster Session 2022, Finance Seminar at London Business School, Wharton Inter-Finance PhD Seminar Spring 2022, JFA-PBFJ Special Issue Conference 2022, Academy of Finance Conference 2022, Monash University Financial Markets and Corporate Governance Conference 2022, Trans Atlantic Doctoral Conference 2022, EFMA 2022 Annual Conference, 2022 FMA European Conference, London Business School PhD Alumni Workshop 2022.

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Figure: Entity type distribution of common owners across selected countries' publicly listed corporations.