Institutional Investors, Common Control, and Risk: An Investigation into Motives and Consequences

Author
Ping Wang, James Barrese
Region
North America
Topic
Strategy & General Management
Length
17 pages
Keywords
corporate ownership
investors
risk
corporate and industry interactions
ownership
Student Price
$0.00
Target Audience
Undergraduate Students

This paper provides a synthesis of the recent literature related to corporate ownership issues and theoretical models of corporate and industry interactions linked through common ownership by institutional investors. The paper elaborates a theme observed by Azar and others with a focus on airlines (2017) and banking (2016). We supply a mathematical framework suggesting that homogeneity in operations of firms under common ownership may put the institutional owner’s long-term interest at risk. To stimulate future research, we present a preliminary analysis of two sampled industries. Common ownership is also observed in other industries.