Einer Elhauge ‘The Causal Mechanisms of Horizontal Shareholding’ (2021, forthcoming) Ohio State Law Journal 82

Common shareholding exists when the leading shareholders of different corporations overlap. More than two dozen empirical studies have now confirmed that common shareholding alters corporate behaviour. Ten of those empirical studies have confirmed that horizontal ownership often has anticompetitive effects in concentrated markets. These include five market-level studies, a massive cross-market study of hundreds of consumer goods, two national studies across all industries, a new study of horizontal ownership by venture capitalists, and a new study showing that firm entry into the S&P500 creates an exogenous increase in horizontal shareholding that raises rival stock prices. Despite this, critics have argued that the law should not take any action until we have clearer proof on the causal mechanisms through which common shareholding operates. Some have developed a typology of causal mechanisms, only to argue that each type of mechanism either has not been empirically tested or is implausible. Others go even further and argue that the empirical studies showing that common…

Martin Schmalz ‘Recent studies on common ownership, firm behavior, and market outcomes’ (2021) Antitrust Bulletin 66 (1)

The literature on competitive effects of common ownership has grown at a fast rate in the past two years. This review seeks to give some structure to the latest work in this area by selectively covering a few of the more prominent papers that have emerged over the past couple of years. It concludes that progress in terms of data quality and scope would be the most welcome step regulators could take in order to improve transparency and quality of research on the competitive effects of common ownership. The paper, available here, proceeds by looking at different dimensions of the common ownership debate: Section I looks at the theory of governance mechanisms by which common ownership can cause variation in competitive outcomes. A common feature of the policy discussion on common ownership are demands for more “causal evidence” of how corporate governance mechanisms can cause anticompetitive effects, over and above the evidence the literature has already accumulated. To an economist,…