Common Ownership in America: 1980–2017
- (pp. 273-308)
Abstract
We empirically assess the implications of the common ownership hypothesis from a historical perspective using the set of S&P 500 firms from 1980 to 2017. We show that the dramatic rise in common ownership in the time series is driven primarily by the rise of indexing and diversification and, in the cross section, by investor concentration, which the theory presumes to drive a wedge between cash flow rights and control. We also show that the theory predicts incentives for expropriation of undiversified shareholders via tunneling, even in the Berle and Means (1932) world of the widely held firm.Citation
Backus, Matthew, Christopher Conlon, and Michael Sinkinson. 2021. "Common Ownership in America: 1980–2017." American Economic Journal: Microeconomics, 13 (3): 273-308. DOI: 10.1257/mic.20190389Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- L21 Business Objectives of the Firm
- L25 Firm Performance: Size, Diversification, and Scope
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