Common Ownership Directors

We develop a model in which common owners of firms in the same industry appoint a common director to benefit from information-sharing between firms with similar products. Information sharing increases the likelihood of product success but also reduces profits from heightened competition. Empirically, we find that active, long-term common owners with sizable stakes—notably in pharmaceuticals—are more likely to appoint common directors. Consistent with the model, such appointments are associated with greater product similarity and broader scope, suggesting higher success rates, but with lower markups and diminished innovation. Our findings reveal an active channel linking common ownership to strategy.