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Common Ownership and Competition: Evidence from Ultimate Owners of Private and Public Firms

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  • Heiland, Inga

Abstract

Firms under common ownership have incentives to internalize the consequences of their behavior on each other, potentially resulting in less competition. I exploit unique data from Norway to document the economy-wide extent of common ownership, covering private and public firms and the universe of shareholders. Using exogenous variation in common ownership at the firm-household level due to marriages among large individual shareholders, I provide causal evidence on the effect of common ownership on profit margins. I find that firms experiencing an increase in common ownership due to a marriage increase profit margins by 7 to 16 percentage points, compared to firms that are affected by similar marriages but do not experience a change in common ownership.

Suggested Citation

  • Heiland, Inga, 2024. "Common Ownership and Competition: Evidence from Ultimate Owners of Private and Public Firms," CEPR Discussion Papers 19662, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19662
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    File URL: https://cepr.org/publications/DP19662
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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
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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