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Title: Common Ownership Unpacked
Author: Chiappinelli, Olga
Xefteris, Dimitrios
Papadopoulos, Konstantinos G.
Keywords: Propietat
Competència econòmica
Issue Date: 2023
Publisher: Universitat de Barcelona. Facultat d'Economia i Empresa
Series/Report no: [WP E-Eco23/448]
Abstract: In this paper we study the market effects of common ownership in a setting where any ownership structure and any shareholder size is allowed. We depart from the Standard reduced form approach of assuming that firms maximize a weighted average of shareholders' portfolios, and instead study the collective choice problem of shareholders head-on. In our model shareholder meetings elect firm managers by one-share one-vote majority rule. Managers differ in their degree of aversion to the negative externality of roduction. Voting for socially concerned managers therefore provides a mechanism for common owners to direct away the firm from own profit towards industry profit maximization. We show that allowing shareholders of any size to freely diversify their portfolio leads to monopolistic outcomes. Our results have the novel policy implication that the anticompetitive effects of common ownership can emerge even when blockholders are undiversified, but the majority of shares belongs to small diversified shareholders, indicating that small diversified portfolios may also be a threat.
It is part of: UB Economics – Working Papers, 2023, E23/448
Appears in Collections:UB Economics – Working Papers [ERE]

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