Common Ownership Directors

We develop a stylized 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 common ownership by investors with large stakes, long horizons, and concentrated portfolios—notably in pharmaceuticals—is associated with a higher likelihood of common directors. Consistent with the model, common directors are associated with greater product similarity and broader scope, but with lower markups and diminished exploratory innovation. Our findings point to an active governance channel linking common ownership to strategy.