Cross-ownership and portfolio choice
Andrea Galeotti and
Christian Ghiglino
Journal of Economic Theory, 2021, vol. 192, issue C
Abstract:
Cross-ownership smooths firms' idiosyncratic shocks but affects their portfolio choice and, therefore, their risk-taking position. The classical intuition on the role of pooling risk in raising welfare is valid when ownership is evenly dispersed. However, when the ownership of some firms is concentrated in the hands of a few others, deeper integration leads to excessive risk-taking and volatility and, consequently, it results in lower aggregate welfare.
Keywords: Financial networks; Separation between ownership and control; Bow-tie; Diversification; Concentration; Risk taking (search for similar items in EconPapers)
JEL-codes: G11 G32 G34 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053121000119
Full text for ScienceDirect subscribers only
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:192:y:2021:i:c:s0022053121000119
DOI: 10.1016/j.jet.2021.105194
Access Statistics for this article
Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell
More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().