Common-Ownership Concentration and Corporate Conduct

Schmalz, Martin C.

doi:10.1146/annurev-financial-110217-022747

Cited by 173 publications

(79 citation statements)

References 104 publications

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“…If common ownership between vertically related firms has an impact on their CSR behaviour, common ownership between horizontally related firms (that is, competitors) is also likely to matter, as argued by Serafeim (2018). However, despite a growing volume of research about common ownership across competitors and its impact on corporate conduct (see Schmalz (2018) for a review), no study to date has investigated the impact of such common ownership on CSR. Deng et al (2013) find that mergers by high-CSR acquirers take less time to complete and are less likely to fail than mergers by low-CSR acquirers.…”

Section: The Roles Of Shareholders and Other Stakeholders In Buildingmentioning

confidence: 99%

The impact of ownership on building sustainable and responsible businesses

Villalonga¹

2018

JBA

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This article reviews what we know and do not know about the impact of ownership on building sustainable and responsible businesses. It begins by analysing why firm owners are an important driver of responsible business behaviour, and reviews whether such behaviour comes at a financial cost to owners or not. It then discusses how owners drive responsible business behaviour as compared to other stakeholders, reviewing the empirical evidence about the impact of different owner types on various forms of responsible business.My review shows that there is a fair amount of research about certain topics, such as the relation betweeen financial and social performance and about the social and enviromental impact behaviour of the two most prevalent types of owners of public corporations-families and institutional investors-although the cumulative evidence on those topics is far from conclusive. Moreover, there are also a number of gaps in our knowledge that warrant further research to inform recommendations to business leaders and policy makers. These include the relative effectiveness of different types of owners, stakeholders, and organisational forms at building sustainable and responsible businesses; the impact of the recent evolution of capital markets on CSR behaviour; and the social snd enviromental impact of the state, foundations, and employees as owners of corporations. EXECUTIVE SUMMARYEquity ownership of corporations is a critical factor in building sustainable and responsible businesses. The paper sets out to review previous studies of this relationship and adopts a multidisciplinary approach to identify gaps in the understanding of how ownership has an impact on business practices and policies.

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Section: The Roles Of Shareholders and Other Stakeholders In Buildingmentioning

confidence: 99%

The impact of ownership on building sustainable and responsible businesses

Villalonga¹

2018

JBA

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“…7 In the United States, minority shareholdings are examined with reference to merger control rules, the Clayton Act and the Hart-Scott-Rodino Act in particular. Despite that there 5 See also the evidence in Schmalz (2018) who also points out that both passive and active investment strategies contribute to common ownership. 6 E.g., automobiles, airlines, …nancial, energy, and steel; see Gilo et al (2006).…”

Section: Introductionmentioning

confidence: 99%

Overlapping Ownership, R&D Spillovers, and Antitrust Policy

López

Vives

2017

SSRN Journal

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This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with overlapping ownership. We show that overlapping ownership leads to internalization of rivals. profits by firms and find that, for demand not too convex, increases in overlapping ownership increase (decrease) R&D and output for high (low) enough spillovers while it increases R&D but decreases output for intermediate levels of spillovers. There is scope for overlapping ownership to improve welfare provided that spillovers are sufficiently large. The socially optimal degree of overlapping ownership increases with the number of firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the desirability of overlapping ownership is greatly reduced even under low market concentration. When R&D has commitment value and spillovers are high the optimal extent of overlapping ownership is higher. The results obtained are robust in the context of a Bertrand oligopoly model with product differentiation. JEL-Codes: D430, L130, O320. We thank Ramon Faulí-Oller for his insightful initial contributions and to the editor and three anonymous referees for very useful suggestions. For helpful comments we thank Isabel Busom, Luis Cabral,

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“…There is a recent body of literature examining the effects of partial common-ownership links between strategically interacting firms (Schmalz 2018). The potential problem with common ownership is that the decision maker in the firm might take rival firms profits into account when making decisions for her own firm.…”

Section: Negative External Effectsmentioning

confidence: 99%

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

Koptyug

Persson

Tåg

2020

The North American Journal of Economics and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACTIn recent years, the number of listed companies has been declining in many countries across the world. This paper provides a selective survey of the literature on the real economic effects of the stock market to assess the potential effects of this decline and determine whether it is likely to continue. The leading economic role of the stock market's primary market, in which firms raise capital by issuing new shares, is to help growing firms secure financing. We discuss providing and certifying information, coordinating investors, and easing the redeployment of capital as the means through which capital allocation can be achieved efficiently. The main economic role of the stock market's secondary market, the trade in existing shares, is to provide liquidity to shareholders, to aid in price discovery, and to provide diversification opportunities. Positive external effects from an active stock market may arise on consumers, labour and private firm due to increased corporate investment, more social responsible business strategies and a more positive business climate. Negative external effects on capital allocation and productivity can arise from short-termism, market mispricing, and increased cross-ownership. Local stock markets can spur innovation and foreign direct investment (FDI) and reduce the risk of early cross-border acquisitions. Given the myriad of useful economic functions the stock market performs, a future entirely absent of public companies is difficult to imagine and the decline is therefore likely at some point to come to an end. Whether we need to worry about the decline depends on the relative importance of the positive and negative external effects, a topic we feel warrants more research.

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Common-Ownership Concentration and Corporate Conduct

Cited by 173 publications

References 104 publications

The impact of ownership on building sustainable and responsible businesses

The impact of ownership on building sustainable and responsible businesses

Overlapping Ownership, R&D Spillovers, and Antitrust Policy

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

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