Aims of the Course:

We will review the vastly expanding literature on common ownership. While concerns have been raised about the increasing influence of institutional investors with similar ownership structures on market conduct of their portfolio companies, the dominant investors like Blackrock, State Street and Vanguard even sponsor academic research and consequence in order to establish empirical facts about the benefits of low-cost diversification offered via active
or passive investments.

Going back to first principles, wouldn’t two fund separation imply that all investors should hold, and thus become common owners of the market portfolio? What would this ownership structure imply for the competitive conduct of portfolio companies in product markets? Wouldn’t cartelization increase profits and, thus, investment returns of portfolio companies? But who is paying the product market prices? In other words, how do the interests of common
owners affect ideal and real market incentives? What are the costs and benefits of common ownership?

The course takes place regularly on selective Wednesday, 14.00-15.30 from Mar, 19th until Jun 25th.

Attendance is mandatory.

A reading course requires that all participants have read the material to be presented before each meeting in order to be able to engage in meaningful debate on details of the papers to be presented.

• Presentation (40%)
• Referee report about another paper (30%)
• Active participation (30%) –

Please log in with your WU account to use all functionalities of read!t. For off-campus access to our licensed electronic resources, remember to activate your VPN connection connection. In case you encounter any technical problems or have questions regarding read!t, please feel free to contact the library at readinglists@wu.ac.at.

Professor Thomas P. Gehrig
thomas.gehrig@univie.ac.at
http://homepage.univie.ac.at/thomas.gehrig/

Office hours and administrative support:
Please contact Sigrid Hopf at sigrid.hopf@univie.ac.at or Christine Neumeyer at christine.neumayer@univie.ac.at

1. Common ownership and market performance

a. Azar, Schmalz, Tecu (2018): Anti-competitive effects of common ownership, Journal of Finance 73(4), 1513-1656.
b. Azar, Raina, Schmalz (2021): Ultimate Bank Ownership and Bank Competition, Financial Management 51(1), 227-69.
c. Backus, Conlon, Sinkinson (2021): Common ownership in America: 1980-2017, American Economic Journal: Microeconomics 13(3), 273-308.
d. Posner, Scott-Morton, Weyl, (2017): A proposal to limit anti-competitive power of institutional owners, Antitrust Law Journal 81(3), 669-728.
e. Dennis, Gerardi, Schenone (2022): Common ownership does not have anticompetitive effects in the airline industry, Journal of Finance 77(5), 2766-2798.
f. Lewellen, Lowry (2021): Does common ownership really increase firm coordination? Journal of Financial Economics 141(1), 2394-2437.
g. Ederer, Pellegrino (2024): A tale of two networks: common ownership and product market rivalry, ECGI-DP 953/2024.

2. Measuring common ownership

a. Gilje, Gormley, Levitt (2020): Who is paying attention? Measuring common ownership and its affect on managerial incentives, Journal of Financial Economics 137, 152-178.

3. Common ownership and management incentives

a. Anton, Ederer, Gine, Schmalz (2023): Common ownership, competition, and top management incentives, Journal of Political Economy 131, 1294-1355.
b. Edmans, Levit, Reilly (2019): Governance under common ownership, Review of Financial Studies 32, 2673-2719.
c. Apel, Gormley, Kein (2016): Passive investors, not passive owners, Journal of Financial Economics 121, 111-141.

4. Common ownership and (systemic) risk

a. Farhi, Tirole (2012): Collective Moral Hazard, Maturity Mismatch, and Systemic Bailouts, American Economic Review 102 (1): 60–93.
b. DeGeorge, Reiter, Synn, Williams (2025): Institutional ownership and the propagation of systemic risk among banks, ssrn 2025 (first version: 2016)

5. Common ownership and firm objectives

a. Hart, Zingales (2017): Companies should maximize shareholder welfare, not shareholder value, Journal of Law, Finance, and Accounting 2, 247-274.
b. Azar, Vives (2021): General Oligopoly and Ownership Structure, Econometrica 89(3), 999-1048.