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

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Cross-ownership
Product market competition
Industry
Product market
Causality
Market performance
Mergers
Joint ventures
Blockholders
Financial institutions
Market share
Natural experiment
Strategic alliances
Market behavior
Difference-in-differences
Profitability

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Product market competition in a world of cross-ownership : Evidence from institutional blockholdings. / He, Jie; Huang, Jiekun.

In: Review of Financial Studies, Vol. 30, No. 8, 01.01.2017, p. 2674-2718.

Research output: Contribution to journalArticle

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