We developed a model under which the allocation of control rights between shareholders and managers (“governance structure”) is irrelevant to firm value. In our model, governance structures affect managers’ incentive to invest, as strong...Read more
Scholars and antitrust enforcers have raised concerns about anticompetitive effects that may arise when institutional investors hold substantial stakes in competing firms. Their concern rests on empirical evidence that such common concentrated...Read more
We derive a measure that captures the extent to which common ownership shifts managers’ incentives to internalize externalities. A key feature of the measure is that it allows for the possibility that not all investors are attentive to whether a...Read more
This paper shows how network theory can improve our understanding of institutional investors’ voting behavior and, more generally, their role in corporate governance. The standard idea is that institutional investors compete against each other on...Read more
We study anti-competitive mergers in a dynamic model with noisy collusion. At each instant, firms either privately choose output levels or merge, which trades off benefits of avoiding price wars against the costs of merging. There are three...Read more
This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with overlapping ownership. We show that overlapping ownership leads to internalization of rivals’ profits by firms and find that, for demand not too...Read more
We examine the market reactions to earnings announcements within a parent-subsidiary ownership structure. We find that the parents’ investors react to all announcements within the group either immediately or with delay, whereas subsidiaries’...Read more
When one firm's strategy affects other firms' value, optimal executive incentives depend on whether shareholders have interests in only one or in multiple firms. Performance-sensitive contracts induce managerial effort to reduce costs, and lower...Read more
Conventional wisdom is that diversification weakens governance by spreading an investor too thinly. We show that, when an investor owns multiple firms ("common ownership"), governance through both voice and exit can strengthen -- even if the...Read more
The central theme in corporate governance is that allocating more control rights to shareholders will allow them to hold disloyal managers...Read more
On 11 February 2019 the European Corporate Governance Institute (ECGI) teamed up with the International Corporate Governance Network (ICGN) to...Read more
The 2018 ECGI Annual Member meeting featured a Focus Panel on "...Read more