Common Ownership and Entrepreneurship
AbstractWe complement the literature on common ownership by presenting two new observations from entrepreneurial start-ups. First, given the increase in common ownership of start-ups by venture capital investors, inclusion of high-value start-ups in standard common ownership measures may actually increase aggregate measures of common ownership. Second, we suggest that even if public-firm common ownership leads to collusive inefficiency and higher prices in the short term, it may also create opportunities for entry of innovative high-growth start-ups. Consistent with this, we document that entrepreneurial activity and common ownership of start-ups tends to be higher in industries with higher common ownership among public firms.
CitationEldar, Ofer, and Jillian Grennan. 2021. "Common Ownership and Entrepreneurship." AEA Papers and Proceedings, 111: 582-86. DOI: 10.1257/pandp.20211120
- L26 Entrepreneurship
- M13 New Firms; Startups
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G24 Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies