The Conundrum of Common Ownership

The Conundrum of Common Ownership

Jennifer Hill

Series number :

Serial Number: 

Date posted :

March 01 2020

Last revised :

March 01 2020
SSRN Share


  • Shareholding • 
  • concentrated ownership • 
  • portfolio diversification • 
  • Common ownership • 
  • institutional investors • 
  • index funds • 
  • passive investors • 
  • Antitrust • 
  • regulation.

One of the most contentious debates in corporate law today, the common ownership debate. It focuses on the situation where large financial institutions with widely diversified portfolios own shares in competing companies within a particular economic sector.

A number of scholars have argued that, even where these institutions have relatively small ownership stakes, their collective holdings in competing companies produce anticompetitive effects. The common ownership debate is a by-product of major changes to capital market structure, which have triggered concerns about the rise of institutional investors, the growth of index investing, and increasing ownership concentration in financial markets. Although the common ownership theory began in the United States, it is now attracting attention around the world. This article examines three possible narratives that exist in the literature relating to institutional investors and common ownership, and seeks to contextualize the theory within a broad range of international corporate governance developments relating to institutional investment since the early 1990s. The article analyzes certain aspects of the common ownership theory in the light of contemporary corporate governance developments and debate, and concludes that drawing regulatory and policy conclusions from current mixed empirical evidence relating to common ownership is premature.

Published in

Published in: 
Publication Title: 
The Vanderbilt Journal of Transnational Law (Forthcoming)