Common Ownership and Firm Profitability

Harald Hau, Ferdinand Loessl and Stefan Sperlich
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Harald Hau: University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)
Ferdinand Loessl: University of Geneva
Stefan Sperlich: Université de Genève, GSEM

No 26-63, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We generalize the theory of common ownership from industry classifications to firm networks, using text-based product similarity to define granular, overlapping, and asymmetric competitive neighborhoods. Across US public firms from 1999 to 2019, we find a statistically robust positive relationship between price-cost margins and the Modified Herfindahl-Hirschman Index Delta that captures ownership concentration within these neighborhoods. To ensure that the common-ownership channel is not confounded by simultaneous variation in market shares, we apply a varying-coefficient model that isolates the common-ownership component from the mechanical co-movement with quantity-share concentration.

Keywords: Market power; competitive networks; institutional investors; firm collusion (search for similar items in EconPapers)
JEL-codes: C14 C45 L1 L2 L4 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2026-09
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2663

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