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Does Common Ownership Influence the Financial Strategy of the French Pharmaceutical Firms?

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  • Antonio Estache
  • Christophe Kieffer

Abstract

This paper provides evidence on the growing degree of common ownership in the French pharmaceutical industry, on the associated anticompetitive risks and on the substantial differences across product markets within the industry. The assessment relies on the traditional Herfindahl-Hirschman Index, its modified version adopted by the common ownership literature and a new simpler alternative. These measures are then correlated with financial performance indicators collected at firm level. We find a positive and statistically significant relationship of concentration due to common ownership with the return on equity and the leverage level for some products.

Suggested Citation

  • Antonio Estache & Christophe Kieffer, 2021. "Does Common Ownership Influence the Financial Strategy of the French Pharmaceutical Firms?," Working Papers ECARES 2021-09, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:eca:wpaper:2013/321968
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    References listed on IDEAS

    as
    1. Ruben Jacobo-Rubio & John L. Turner & Jonathan W. Williams, 2020. "The Distribution of Surplus in the US Pharmaceutical Industry: Evidence from Paragraph iv Patent-Litigation Decisions," Journal of Law and Economics, University of Chicago Press, vol. 63(2), pages 203-238.
    2. Banal-Estañol, Albert & Newham, Melissa & Seldeslachts, Jo, 2021. "Common Ownership in the U.S. Pharmaceutical Industry: A Network Analysis," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 66(1), pages 68-99.
    3. Jo Seldeslachts & Melissa Newham & Albert Banal-Estanol, 2017. "Changes in Common Ownership of German Companies," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 7(30), pages 303-311.
    4. Schmalz, Martin, 2018. "Common Ownership Concentration and Corporate Conduct," CEPR Discussion Papers 12598, C.E.P.R. Discussion Papers.
    5. Lee Branstetter & Chirantan Chatterjee & Matthew J. Higgins, 2016. "Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 857-890, November.
    6. Newham, M. & Seldeslachts, J. & Banal-Estanol, A., 2018. "Common Ownership and Market Entry: Evidence from the Pharmaceutical Industry," Working Papers 18/03, Department of Economics, City University London.
    7. Martin C. Schmalz, 2018. "Common-Ownership Concentration and Corporate Conduct," Annual Review of Financial Economics, Annual Reviews, vol. 10(1), pages 413-448, November.
    8. Koch, Andrew & Panayides, Marios & Thomas, Shawn, 2021. "Common ownership and competition in product markets," Journal of Financial Economics, Elsevier, vol. 139(1), pages 109-137.
    9. Gilje, Erik P. & Gormley, Todd A. & Levit, Doron, 2020. "Who's paying attention? Measuring common ownership and its impact on managerial incentives," Journal of Financial Economics, Elsevier, vol. 137(1), pages 152-178.
    10. Jin Xie & Joseph Gerakos, 2020. "The Anticompetitive Effects of Common Ownership: The Case of Paragraph IV Generic Entry," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 569-572, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Antitrust; Common Ownership; France; Index funds; Institutional Investors; Financial strategy; Market Power; Pharmaceuticals; Regulation; Shareholding;
    All these keywords.

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