Diversification, Common Ownership, and Strategic Incentives
- (pp. 561-64)
AbstractWe 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.
CitationBanal-Estañol, Albert, Jo Seldeslachts, and Xavier Vives. 2020. "Diversification, Common Ownership, and Strategic Incentives." AEA Papers and Proceedings, 110: 561-64. DOI: 10.1257/pandp.20201026
- D22 Firm Behavior: Empirical Analysis
- G24 Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill