Common Ownership, Competition, and Top Management Incentives

Miguel Antón, Florian Ederer, Mireia Giné and Martin Schmalz

Journal of Political Economy, 2023, vol. 131, issue 5, 1294 - 1355

Abstract: We present a mechanism based on managerial incentives through which common ownership affects product market outcomes. Firm-level variation in common ownership causes variation in managerial incentives and productivity across firms, which leads to intraindustry and intrafirm cross-market variation in prices, output, markups, and market shares that is consistent with empirical evidence. The organizational structure of multiproduct firms and the passivity of common owners determine whether higher prices under common ownership result from higher costs or from higher markups. Using panel regressions and a difference-in-differences design, we document that managerial incentives are less performance sensitive in firms with more common ownership.

Date: 2023
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Related works:
Working Paper: Common Ownership, Competition, and Top Management Incentives (2022)
Working Paper: Common Ownership, Competition, and Top Management Incentives (2018)
Working Paper: Common Ownership, Competition, and Top Management Incentives (2017)
Working Paper: Common Ownership, Competition, and Top Management Incentives (2016)
Working Paper: Common Ownership, Competition, and Top Management Incentives (2016)
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