Common Ownership and Corporate Governance
Document Type
Book Chapter
Publication Date
5-2025
Abstract
The common ownership literature advances the claim that investment funds’ shareholdings of rival firms cause these firms to compete less and that it does so even without the funds communicating with, or facilitating the collusion among, the companies in which they are invested. This chapter uses the lens of corporate governance to evaluate this claim. The chapter’s method of analysis is based on the fundamental premise that a firm’s competition decisions are not made directly by its shareholders, whether they are common owners or otherwise, but instead are made by the firm’s managers. These managers, in turn, operate within an intricate and well-studied corporate governance framework that serves to shape their incentives. As the chapter shows, after application of the necessary corporate governance analysis, there is little reason to believe that common ownership, at least at current levels, is lessening managerial incentives to operate firms in any way less competitive than if there were no common ownership.
Disciplines
Business Organizations Law | Law | Law and Politics
Recommended Citation
Merritt B. Fox & Manesh S. Patel,
Common Ownership and Corporate Governance,
The Oxford Handbook of Corporate Law and Governance, Jeffrey N. Gordon & Wolf-Georg Ringe (Eds.), Oxford University Press
(2025).
Available at:
https://scholarship.law.columbia.edu/faculty_scholarship/4770
Comments
This book chapter was initially published online May 22, 2025.