Common ownership occurs when the leading shareholders of industry competitors overlap. While most of the research on this topic has been focused on the U.S. equity market, the three papers presented in this thesis offer a fresh perspective by examining the common ownership phenomenon through a European lens and addressing gaps in the existing literature. The first paper investigates the historical trend in institutional holdings and the determinants of common ownership among FTSE MIB’s constituents. The findings show a significant increase in institutional holdings over time, resulting in a slight increase in common ownership links. The regression analysis reveals that changes in common ownership are positively and significantly associated with a firm's retail share and institutional portfolios’ indexing level, providing insight into the drivers of this phenomenon. The second paper makes theoretical and empirical contributions to the research on the anticompetitive effects of common ownership. Using a two-period duopoly model in which firms’ customers face switching costs, I demonstrate that increased common ownership harms consumers by raising first-period prices above the equilibrium level obtained in the absence of common ownership. I also conduct an analysis to evaluate the welfare implications of the model. Finally, using the sample of FTSE MIB’s constituents, I empirically show that the higher the level of switching costs faced by firms' customers, the stronger the positive relationship between common ownership and market power. The third paper, using a broad sample of European listed firms, sheds light on the impact of common ownership on corporate finance decisions investigating the relationship between common ownership and investment efficiency. The results indicate a conditional negative (positive) association between common ownership and investments among firms that are more prone to over (under) invest. Additionally, the study shows that firms with higher common ownership with their industry peers are less likely to deviate from predicted investment levels.
Con riferimento al mercato azionario, si parla di “common ownership” quando un gruppo di investitori possiede collettivamente quote di partecipazione significative in imprese concorrenti all’interno dello stesso settore. Mentre la maggior parte della ricerca su questo argomento si è concentrata sul mercato azionario statunitense, i tre articoli inclusi in questa tesi offrono una nuova prospettiva esaminando il fenomeno della common ownership da un punto di vista europeo e colmando i vuoti nella letteratura esistente. Il primo articolo indaga il trend storico delle partecipazioni istituzionali e le determinanti della common ownership tra le società componenti dell’indice FTSE MIB. I risultati mostrano un aumento significativo delle partecipazioni istituzionali nel corso del tempo, con un conseguente leggero aumento dei legami common ownership tra le società. L'analisi di regressione rivela che le variazioni della common ownership sono positivamente e significativamente associate alla quota di partecipazione complessiva detenuta da investitori retail nella società, così come al livello di indicizzazione del portafoglio degli investitoti istituzionali, fornendo dunque informazioni sui driver di questo fenomeno. Il secondo articolo contribuisce alla letteratura sugli effetti anticoncorrenziali della common ownership sia da un punto di vista teorico che empirico. Attraverso un modello di duopolio a due periodi in cui i consumatori sostengono switching costs, lo studio dimostra come l'incremento della common ownership danneggia i consumatori aumentando i prezzi fissati dalle imprese nel primo periodo al di sopra del livello di equilibrio ottenuto in assenza di common ownership. L’articolo include anche un’analisi per valutare le implicazioni del modello in termini di welfare. Infine, un’analisi empirica condotta sulla società incluse nel FTSE MIB mostra come la relazione positiva tra common ownership e potere di mercato e tanto più forte quanto maggiore è il livello degli switching costs sostenuti dai clienti delle imprese. Il terzo articolo, utilizzando un ampio campione di società quotate europee, fa luce sull'impatto della common ownership sulle decisioni di corporate finance indagando il rapporto tra common ownership ed efficienza degli investimenti.I risultati indicano un'associazione condizionale negativa (positiva) tra common ownership e livello degli investimenti tra le imprese che sono più inclini a investire in eccesso (in difetto) rispetto al livello ottimale. Lo studio evidenzia, inoltre, come la probabilità di deviare dai livelli di investimento previsti è inferiore nelle società legate da maggiori livelli di common ownership.
Common Ownership, Market Power, and Investment Efficiency / DE ASCENTIIS, Federica. - (2023 Jun 12).
Common Ownership, Market Power, and Investment Efficiency
DE ASCENTIIS, FEDERICA
2023-06-12
Abstract
Common ownership occurs when the leading shareholders of industry competitors overlap. While most of the research on this topic has been focused on the U.S. equity market, the three papers presented in this thesis offer a fresh perspective by examining the common ownership phenomenon through a European lens and addressing gaps in the existing literature. The first paper investigates the historical trend in institutional holdings and the determinants of common ownership among FTSE MIB’s constituents. The findings show a significant increase in institutional holdings over time, resulting in a slight increase in common ownership links. The regression analysis reveals that changes in common ownership are positively and significantly associated with a firm's retail share and institutional portfolios’ indexing level, providing insight into the drivers of this phenomenon. The second paper makes theoretical and empirical contributions to the research on the anticompetitive effects of common ownership. Using a two-period duopoly model in which firms’ customers face switching costs, I demonstrate that increased common ownership harms consumers by raising first-period prices above the equilibrium level obtained in the absence of common ownership. I also conduct an analysis to evaluate the welfare implications of the model. Finally, using the sample of FTSE MIB’s constituents, I empirically show that the higher the level of switching costs faced by firms' customers, the stronger the positive relationship between common ownership and market power. The third paper, using a broad sample of European listed firms, sheds light on the impact of common ownership on corporate finance decisions investigating the relationship between common ownership and investment efficiency. The results indicate a conditional negative (positive) association between common ownership and investments among firms that are more prone to over (under) invest. Additionally, the study shows that firms with higher common ownership with their industry peers are less likely to deviate from predicted investment levels.File | Dimensione | Formato | |
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