Tove Forsbacka

I am an Assistant Professor at the Norwegian School of Economics. 

I study proxy advisors, the least-appreciated power brokers of the investment industry. In my Job Market Paper, I show that 70% of all institutional investors use the same proxy advisor when they vote at shareholder meetings and how this leads to coordination of investors' interests and softening of competition. For this research, I have received the CRESSE-CPI Young Researcher Award 2024 and the Best Paper Award at the Swedish National Ph.D. Workshop in Finance 2023. 

You can hear me talk about proxy advisors here (in Swedish), where I am interviewed by Dagens industi.

I obtained my Ph.D. from Stockholm School of Economics in 2024 and received the Peter Högfeldt Award for Outstanding Ph.D. Thesis. I have held visiting positions at the University of Chicago (2022/23) and Paris Panthéon-Assas University (spring 2022). 

My CV is available here.

Research

WORKING PAPERS

The Proxy Advice Industry and Common Owners' Coordination

Winner: CRESSE- CPI Young Researcher Award 2024, Best Paper Award at the Swedish National Ph.D. Workshop in Finance 2023 

Conferences: Harvard-Oxford Conference on Common Ownership 2024, ECGI-SHOF Corporate Governance Conference 2024, IIOC 2025, CRESSE 2024, CEPR IO Gathering 2023

Coverage: ECGI blog

[Working Paper]

Abstract: High levels of common ownership may reduce firms’ incentives to compete. The empirical relevance of this concern is controversial, in part because there are no obvious mechanisms for common owners to coordinate their actions. I study a channel, proxy advisors, which may induce such coordination simply by satisfying their fiduciary duty. A single proxy advisor – Institutional Shareholder Services (ISS) – provides advice to 70% of all institutional investors on how to vote at shareholder meetings. I clarify in a theoretical framework how a proxy advisor maximizing client value will promote softer competition for commonly held firms. Combining data on ownership and shareholder meetings for all publicly listed U.S. firms (2003-2017), I find empirical support for the model’s mechanism. In particular, for a firm with higher common ownership, ISS is more likely to i) support mergers, ii) oppose managerial incentive contracts that enhance performance-sensitivity, and iii) support director interlocks. 

Does the Production Approach to Markup Estimation Match a Stylized Fact?  

Conferences: University of Zurich Market Power Workshop 2024, BECCLE 2022, EARIE 2022

[Working Paper]

Abstract: The production approach estimates firms' markups using sales, variable costs, and output elasticity. The approach has recently attracted the attention of scholars and policymakers for its straightforward implementation and limited data requirements. Criticism has also been directed at the approach and validation of the approach is called for. This paper provides a novel empirical assessment of the approach using rich panel data on the complete population of Swedish firms across four sectors (1998-2019). I first estimate the markup of each firm using the production approach. Using two sources of identification, I then test whether these estimates can match the stylized fact that markups are higher on more concentrated local markets. In static tests, I study geographically independent markets that vary in market structure and find that estimated markups corroborate to the stylized fact for three of the four sectors. In dynamic tests, focusing on changes in concentration, I find that markups fall with entry and rise with exits.

Cartels as Shock Absorbers

with Chloé Le Coq and Catarina Marvão 

Conferences: CRESSE 2025, Oligo Conference 2025, NORIO 2025

[Working Paper]

This paper investigates how business cycles and interest rate fluctuations affect cartel dynamics. To do so, we apply a Hidden Markov Model to a unique dataset on a population of (legal) cartels in Sweden, from 1947 to 1993. We find that GDP shocks and higher interest rates, as a proxy for borrowing costs, increase cartel formation and reduce cartel dissolution, with stronger effects in the manufacturing sector. Thus, GDP shocks and higher interest rates lead to an increase in the number of cartels in the economy. These findings highlight how cartels act as shock absorbers, helping firms handle economic instability and reducing the impact of both positive and negative shocks.

PUBLICATIONS

Cartel Birth and Death Dynamics: Empirical Evidence

with Chloé Le Coq and Catarina Marvão 

International Journal of Industrial Organization (2023)

[Paper] [SSRN]

Abstract: This paper examines how a gradual tightening of antitrust enforcement impacts cartels' births and deaths. To avoid the inherent sample selection bias in prosecuted cartel studies, we use a unique dataset of Swedish legal cartels registered between 1946 and 1993. We compare estimates from a count model (considering only registered cartels) and a Hidden Markov Model (allowing for potentially unregistered cartels) to identify observed and hidden cartel dynamics. The count model suggests that strengthening antitrust enforcement has a deterrent effect, but the Hidden Markov Model suggests otherwise. Despite stricter competition laws and a credible threat of cartel prohibition, cartels continue to form, but do so undercover. Additionally, our results suggest that the strengthening of competition law has little impact on destabilizing existing cartels.

SELECTED WORK IN PROGRESS

Proxy Advisors, Anti-Hedging Policies, and Executive Compensation Contracts

with Jihun Bae, Tore Ellingsen, Eirik Gaard Kristiansen, and Ruishen Zhang

Abstract: Anti-hedging policies (AHPs) prevent company executives from hedging compensation packages in financial markets. We document the explosive spread of AHPs among S&P 1500 firms during the period 2006-2021. Leveraging a large policy change by an influential proxy advisor that strongly advocated for AHPs from December 2012 onwards, we then use variation in ownership shares of the advisor’s clients to assess the advisor’s impact on AHPs. Using this instrument, we finally investigate how AHPs cause changes in executive compensation contracts. 

The Effect of Private Equity on Markups

with Marcus Hagman

Abstract: This paper studies the effect of private equity on firms' markups using rich panel data on all PE buyouts in Sweden (1998-2019). We find that target firms' markups increase following a buyout, compared to matched control firms. We then study whether this effect is driven by enhanced efficiency, cost savings, or increased market power. 

Teaching

• Firm Strategy and Competition, Norwegian School of Economics, Lecturer, 2025

• Corporate Strategic Behavior and Market Power, Norwegian School of Economics, Lecturer, 2025

• Data Analytics in R, Paris Panthéon-Assas University, Guest Lecturer, 2022

• Empirical Economics, Stockholm School of Economics, Teaching Assistant, 2020 & 2021

• Economics of Organizations, Stockholm School of Economics, Teaching Assistant, 2020