Speaker:
Yaron Nili
Associate Professor of Law and Smith-Rowe Faculty Fellow in Business Law University of Wisconsin Law School
Discussant:
Elizabeth Pollman
Professor of Law, University of Pennsylvania Law School
Abstract
Authors: Ofer Eldar, Yaron Nili, James Pinnington
Although there is evidence that common ownership of public firms may affect various outcomes, the mechanism through which common owners affect corporate strategy remains unclear. Using data on overlapping directors and institutional shareholding from 2000 to 2019, we show that common ownership across firms in the same industry is associated with a higher probability that they share a director. The results are particularly strong for institutions with lower portfolio turnover and longer investment horizons. However, we find little relationship using common ownership by the “Big Three” fund families (BlackRock, Vanguard, and State Street). Our results hold across various measures of common ownership, different definitions of competitors, and a variety of robustness checks. Overall, we present a mechanism through which common ownership may affect managerial incentives.
