DP17776 Commmon-Ownership vs. Cross-Ownership: Evidence from the Automobile Industry
Overlapping ownership has gained considerable momentum in the last decades, yet little is known about the role of its sources. We quantify the relative importance of common ownership, by shareholders external to an industry, and cross-ownership, by firms within the industry. We focus on the global automobile industry, over the period 2007-2021, and document that common-ownership links amount to 31–40%, while cross-ownership links amount to 5–9% of automobile manufacturers’ stock. We show that not accounting for these relatively modest cross-ownership links has important implications: it underestimates the average weight assigned by managers to the profit of competitors by between 41–105%.