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Common institutional investors and board representation in rival firms

Author

Listed:
  • Geng, Heng
  • Hau, Harald
  • Michaely, Roni
  • Nguyen, Binh Hoang

Abstract

The large increase in common institutional ownership has raised legitimate antitrust concerns. While the exact channel by which common institutional shareholders might influence firm policy remains unclear, a prominent potential mechanism is corporate board representation. Using hand-collected data on shareholders' board representation, we show that instances of institutional investors simultaneously holding board positions in rival companies are exceedingly rare and do not account for the positive correlation between common institutional ownership and firm-pair profitability. Our findings suggest that board representation by institutional investors is unlikely to represent an empirically potent channel of influence on corporate policy.

Suggested Citation

  • Geng, Heng & Hau, Harald & Michaely, Roni & Nguyen, Binh Hoang, 2025. "Common institutional investors and board representation in rival firms," Journal of Corporate Finance, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:corfin:v:94:y:2025:i:c:s092911992500104x
    DOI: 10.1016/j.jcorpfin.2025.102836
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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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