Review of Financial Studies Vol. 30 No. 8 2017
Product Market Competition in a World of Cross-Ownership: Evidence from Institutional Blockholdings
Abstract
We analyze the effects of institutional cross-ownership of same-industry firms on product market performance and behavior. Our results show that cross-held firms experience significantly higher market share growth than do non-cross-held firms. We establish causality by relying on a difference-in-differences approach based on the quasi-natural experiment of financial institution mergers. We also find evidence suggesting that institutional cross-ownership facilitates explicit forms of product market collaboration (such as within-industry joint ventures, strategic alliances, or within-industry acquisitions) and improves innovation productivity and operating profitability. Overall, our evidence indicates that cross-ownership by institutional blockholders offers strategic benefits by fostering product market coordination.
- Volume
- 30
- Issue
- 8
- Pages
- 2674-2718
- Sources
- bibtex:phds-export.bib