Florian Ederer, Yale University
Florian Ederer, Yale University
Common Ownership, Competition, and Top Management Incentives
Common Ownership, Competition, and Top Management Incentives
02 Nov 201712:00 PM – 1:30 PM
Faculty and doctoral students only
Location:
Baker Library | Bloomberg Center 103
Organizer:
Common Ownership, Competition, and Top Management Incentives
Miguel Antón, Florian Ederer, Mireia Giné, and Martin Schmalz
Abstract: We show theoretically and empirically that managers have steeper financial incentives to expend effort and reduce costs when an industry’s firms tend to be controlled by shareholders with concentrated stakes in the firm, and relatively few holdings in competitors. A side effect of steep incentives is more aggressive competition. We exploit quasi-exogenous variation in common ownership to support a causal interpretation. These findings inform a debate about the objective function of the firm.