• Common Ownership in Product Markets: The Role of Supply Chains

We investigate the relationship between common institutional ownership of firms in sectors along a supply chain and product market competition. Consistent with industrial organization models, common ownership is associated with lower markups in upstream and intermediate sectors and with higher markups in more downstream sectors. We establish causality by relying on a difference-in-differences approach based on the quasi-natural experiment of financial institution mergers. We conclude that common ownership deserves antitrust attention but eventual restrictions should be designed taking into account the overall portfolio composition of investors and jointly considering horizontal and vertical externalities that firms impose on each other.

Presentations: AFA 2023 PhD Student Poster Session, NBIM-Oxford Conference on Common Ownership / Experimental Governance and IO, Owners as Strategists Conference 2023 (Bocconi-St.Gallen), 47th Symposium of the Spanish Economic Association (SAEe), Southwestern Finance Association 2023, Common Ownership Webinar series at the University of Crete.

• Do Environmental and Social Funds Sell When They Disagree?

We investigate the role of Environmental and Social (ES) funds in corporate governance through exit. ES funds constrain their asset allocation to “good" ES stocks and our hypothesis is that this reduces their ability to influence portfolio firms through the threat of exit. We empirically test this hypothesis by studying their portfolio behavior when they are in disagreement with management at the general assembly of portfolio companies. We find that, contrary to conventional funds, ES funds do not sell portfolio companies when their voting behavior is in contradiction with the management or the voting outcome. Consistent with asset allocation constraints, the results are mainly valid when there are few firms of equally good ES standing available to replace portfolio firms. These results cannot be explained by the differences in characteristics and holdings between ES and conventional funds. Our results cast doubts on the ability of ES funds to influence the policies of portfolio firms through governance via exit.

Presentations: 2023 FMA Annual Meeting, Corvinus University of Budapest, 2023 FMA European Conference,  2023 AFFI French Finance Association

• Do Common Owners Display Coordinated Votes in Shareholder Meetings of Portfolio Companies?

We analyze the voting records of institutional investors to understand if their voting behavior is aimed at  internalizing externalities among horizontally and vertically related portfolio firms. We relate the vote distance of pairs of institutional investors to their portfolio characteristics. We find that the portfolio similarity and the level of common ownership in the pair computed based on the set of horizontally and vertically related firms do not affect the vote distance between the institutional investors. However, we observe that the reduction in the voting distance is concentrated in situations when the pair of investors has both high portfolio similarity and a high "quantity" of common ownership. This evidence especially holds in proposals to elect directors. We conclude that the voting decisions of institutional investors do not systematically include a purpose of internalizing externalities among portfolio firms.