Product market competition in a world of cross-ownership: Evidence from institutional blockholdings

Jie He, Jiekun Huang

Research output: Contribution to journalArticle

Abstract

We analyze the effects of institutional cross-ownership of same-industry firms on product market performance and behavior. Our results show that cross-held firms experience significantly higher market share growth than do non-cross-held firms. We establish causality by relying on a difference-in-differences approach based on the quasi-natural experiment of financial institution mergers. We also find evidence suggesting that institutional cross-ownership facilitates explicit formsofproduct market collaboration (such as within-industry joint ventures, strategic alliances, or within-industry acquisitions) and improvesinnovation productivityand operating profitability. Overall, our evidenceindicates that cross-ownership by institutional blockholders offers strategic benefits by fostering product market coordination.

Original languageEnglish (US)
Pages (from-to)2674-2718
Number of pages45
JournalReview of Financial Studies
Volume30
Issue number8
DOIs
StatePublished - Jan 1 2017

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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