Who’s Paying Attention? Measuring Common Ownership and Its Impact on Managerial Incentives

Erik P. Gilje, Todd Gormley and Doron Y. Levit

No 25644, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We derive a measure that captures the extent to which overlapping ownership structures shift managers’ incentives to internalize externalities. A key feature of the measure is that it allows for the possibility that not all investors are attentive to whether a manager’s actions benefit the investor’s overall portfolio. Empirically, we show that potential drivers of ownership overlap, including mergers in the asset management industry and the growth of indexing, could in fact diminish managerial motives. Our findings illustrate the importance of accounting for investor inattention and cast doubt on the possibility that the growth of common ownership has had a significant impact on managerial incentives.

JEL-codes: D82 D83 G23 G34 (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-cfn
Note: CF
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Published as Erik P. Gilje & Todd A. Gormley & Doron Levit, 2019. "Who's paying attention? Measuring common ownership and its impact on managerial incentives," Journal of Financial Economics, .

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