Facilitating Tacit Collusion: A New Perspective on Common Ownership and Voluntary Disclosure

Pawliczek, Andrea; Skinner, A. Nicole; Zechman, Sarah L. C.

doi:10.2139/ssrn.3382324

Cited by 8 publications

(4 citation statements)

References 68 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…50 Indeed, Pawliczek et al (2019) find that higher horizontal shareholding levels increase firm disclosures of information that can help them to coordinate. 51 Note that coordinated action may, as opposed to individual action, find less opposition from non-common owners, as it should also boost individual profits.…”

Section: A Competition Effects Of Common Financial Interests In Compe...mentioning

confidence: 99%

Common Ownership Patterns in the European Banking Sector—The Impact of the Financial Crisis1

Banal‐Estañol

Boot

Seldeslachts

2021

Journal of Competition Law &Amp; Economics

View full text Add to dashboard Cite

We provide a description of ownership patterns in the top 25 European banks for the period 2003–2015, where we especially focus on the global financial crisis. Investment managers, such as Blackrock, are dominant in terms of number of blockholdings in different banks, maintaining fairly stable “common ownership” networks throughout our sample. However, the financial crisis led to capital injections by governments in several banks in trouble, which in turn led to a jump in holdings by governments, which typically are “non-common owners” (i.e., they hold only shares in only one bank). This jump translated into these investors temporarily being the top investor with a large share, and non-common owners being the majority among large shareholders. A brief comparison with US banks uncovers large ownership differences between the European and US banking sectors. We briefly discuss what these ownership patterns might imply for competition, stability and performance in the banking industry.

show abstract

Section: A Competition Effects Of Common Financial Interests In Compe...mentioning

confidence: 99%

Common Ownership Patterns in the European Banking Sector—The Impact of the Financial Crisis1

Banal‐Estañol

Boot

Seldeslachts

2021

Journal of Competition Law &Amp; Economics

View full text Add to dashboard Cite

show abstract

“…He and Huang (2017) show common ownership could facilitate product market collaboration. Pawliczek, Skinner and Zechman (2019) show commonly owned firms use public disclosure to aid in coordinating and monitoring compliance with anti‐competitive strategies. Levenstein and Suslow (2006) and Stigler (1964) find that communication can facilitate both coordinating anti‐competitive behavior and monitoring defection from the common strategy.…”

Section: Related Literature and Hypotheses Developmentmentioning

confidence: 99%

“…Common ownership (competing firms with overlapping ownership) has been shown to be associated with increases in the likelihood of collusion (Azar et al., 2018a, 2018b, 2018c; Azar et al., 2019; He & Huang, 2017; Pawliczek et al., 2019; Levenstein & Suslow, 2006; Stigler, 1964). If competing firms with common owners have reduced incentive to temper collusive selling price behavior, then we expect that asymmetric pricing is more pronounced when firms have common ownership, measured by overlapping institutional investors (institutional investors of a firm that also own shares of peer firms).…”

Section: Introductionmentioning

confidence: 99%

Price asymmetries in the US airline industry

Jiang

Que

2022

The Financial Review

View full text Add to dashboard Cite

We document price asymmetries in the US airline industry. We find evidence that the average airfare increases in response to rising fuel cost but does not decrease in response to declining fuel cost. In searching for the cause of price asymmetries, we find that common ownership, measured by overlapping institutional investors, is associated with greater price asymmetry in the airline industry. To mitigate endogeneity concerns, we exploit the variation in common ownership induced by the financial institution mergers and conduct a difference-in-differences test to establish the causal effects of common ownership on price asymmetry in the airline industry. In addition, airlines in highly concentrated markets exhibit more price asymmetries than those in low concentration markets. Our results support focal price tacit collusion as an important determinant of asymmetric pricing. Furthermore, first-class airfares are shown to decrease more slowly than economy-class airfares in response to fuel cost decreases, which supports consumer search as the mechanism driving asymmetric pricing.

show abstract

“…Prior literature on common ownership contends that common owners influence their portfolio firms' strategies through various mechanisms, such as direct discussions with management, requesting firms to provide strategic plans and evaluating them, and/or threatening portfolio firms with selling the stock (Azar et al 2018). These activities allow common owners to foster implicit or explicit coordination to maximize joint portfolio profits (Pawliczek et al 2019).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

The Effect of Common Ownership on Investment Decisions under Uncertainty.

Baek¹

2020

Preprint

View full text Add to dashboard Cite

This paper examines the effects of firm-level common ownership on the level and efficiency of investment when firms face uncertainty. There is a current debate about the costs and benefits of common ownership, whereby a firm owns large stakes in multiple companies in the same industry. Critics of common ownership argue that it reduces competition and leads to a deadweight loss for the economy through decreased investment. Proponents of common ownership suggest that it allows firms to increase investment due to a reduced threat of involuntary knowledge spillover to rivals. This study contributes to this debate by examining the effects of uncertainty on these relationships. We find that common ownership allows firms to enjoy the value of waiting in the presence of uncertainty resulting in decreased investment that is more efficient. In contrast, common ownership increases investment when uncertainty is low, but these investments are less efficient. These results indicate that common ownership provides benefits to firms in the face of high uncertainty, but also allows firms to engage in valuedestroying activities when uncertainty is low. These findings are important to regulators as they debate regulations that could limit common ownership.

show abstract

Facilitating Tacit Collusion: A New Perspective on Common Ownership and Voluntary Disclosure

Cited by 8 publications

References 68 publications

Common Ownership Patterns in the European Banking Sector—The Impact of the Financial Crisis1

Common Ownership Patterns in the European Banking Sector—The Impact of the Financial Crisis1

Price asymmetries in the US airline industry

The Effect of Common Ownership on Investment Decisions under Uncertainty.

Contact Info

Product

Resources

About