Common Ownership, Competition, and Corporate Governance

Common Ownership, Competition, and Corporate Governance

Vincenzo Denicolò, Fausto Panunzi

Series number :

Serial Number: 

Date posted :

July 28 2023

Last revised :

July 28 2023
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  • Common ownership • 
  • Corporate governance • 
  • Antitrust

This paper presents a theoretical framework for determining the ownership stakes held by financial investors in companies competing in the same product market, or, in other words, the level of common ownership.

In our model, the primary motivation for these investors is the anticipation of capital gains resulting from the impact of common ownership on product market competition, which leads to increased profitability for the firms involved. On the other hand, common ownership undermines effective corporate governance by reducing monitoring, increasing extraction of private benefits by the manager, and inhibiting investments that contribute to firm value. These negative effects on corporate governance act as limiting factors, ultimately determining the equilibrium level of common ownership.


Real name:
Vincenzo Denicolò
Fellow, Research Member
Istituto di Economia Politica & IGIER, Università Bocconi