Common Ownership, Competition, and Top Management Incentives

Common Ownership, Competition, and Top Management Incentives

Miguel Anton, Florian Ederer, Mireia Giné, Martin Schmalz

Series number :

Serial Number: 
511/2017

Date posted :

July 03 2017

Last revised :

September 23 2021
SSRN Share

Keywords

  • Common ownership • 
  • competition • 
  • Managerial incentives • 
  • productivity • 
  • Corporate governance • 
  • Antitrust

We present a mechanism based on managerial incentives through which common ownership affects product market outcomes. Firm-level variation in common ownership causes variation in managerial incentives and productivity across firms, which leads to intra-industry and intra-firm cross-market variation in prices, output, markups, and market shares that is consistent with empirical evidence.

The organizational structure of multiproduct firms and the passivity of common owners determine whether higher prices under common ownership result from higher costs or from higher markups. Using panel regressions and a difference-in-differences design we document that managerial incentives are less performance-sensitive in firms with more common ownership.

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Authors

Mr
Real name:
Miguel Anton
iese