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Common Ownership and Firm Profitability

Author

Listed:
  • Harald Hau

    (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute))

  • Ferdinand Loessl

    (University of Geneva)

  • Stefan Sperlich

    (Université de Genève, GSEM)

Abstract

We generalize the theory of common ownership from industry classifications to firm networks, using text-based product similarity to define granular, overlapping, and asymmetric competitive neighborhoods. Across US public firms from 1999 to 2019, we find a statistically robust positive relationship between price-cost margins and the Modified Herfindahl-Hirschman Index Delta that captures ownership concentration within these neighborhoods. To ensure that the common-ownership channel is not confounded by simultaneous variation in market shares, we apply a varying-coefficient model that isolates the common-ownership component from the mechanical co-movement with quantity-share concentration.

Suggested Citation

  • Harald Hau & Ferdinand Loessl & Stefan Sperlich, 2026. "Common Ownership and Firm Profitability," Swiss Finance Institute Research Paper Series 26-63, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2663
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7470278
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    Keywords

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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