Diversification, Common Ownership, and Strategic Incentives

Aufsätze referiert extern - sonstige

Albert Banal-Estanol, Jo Seldeslachts, Xavier Vives

In: AEA Papers and Proceedings 110 (2020, S. 561-564

Abstract

We argue that within-industry investor diversification is directly related to common ownership incentives (profit loads on rival firms by the manager of a firm) in product markets. Because of their respective investment strategies, passive investors are naturally more diversified than active investors. If more money flows from active toward passive investors, then common ownership incentives increase. The opposite occurs if active investors receive more money flows. This pattern is shown in two example US industries for the period 2004–2012.

Jo Seldeslachts

Research Associate in the Firms and Markets Department



JEL-Classification: D22;G24;G32
DOI:
https://doi.org/10.1257/pandp.20201026
Data set
https://doi.org/10.3886/E120781V1

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