Common Ownership and Institutional Investor Dynamics
Summary
Common ownership arises when institutional investors—such as pension funds, insurance companies and asset managers—hold equity stakes in multiple firms that operate within the same product or service markets. This cross-shareholding structure can alter competitive dynamics, corporate governance practices and investment incentives. As assets shift from active to passive strategies, large index providers and major asset managers wield influence through coordinated proxy voting, private engagements and the diffusion of strategic priorities across portfolio companies. These dynamics intersect with environmental, social and governance (ESG) considerations, antitrust policy and innovation incentives, bearing global significance for regulators, corporate boards and financial markets alike.
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Common Ownership and Institutional Investor Dynamics publication trend
The graph below shows the total number of articles in common ownership and institutional investor dynamics across all publications each year (not limited to Nature Index journals).
Technical terms
Common ownership: A situation in which the same institutional investors hold equity stakes in multiple firms competing in the same market.
Institutional investor: An organisation, such as a pension fund or asset manager, that pools large sums of money to invest in securities.
Proxy voting: A process by which shareholders exercise their voting rights on corporate matters via appointed agents.
Information-based mechanism: The theory that institutional investors with privileged information about peer firms are more likely to hold stakes across these competitors.
Competition-based mechanism: The proposition that institutional cross-holdings increase with industry concentration and the strength of antitrust regulation.
References
- Hidden power of the Big Three? Passive index funds, re-concentration of corporate ownership, and new financial risk†. Business and Politics (2017).
- Steering capital: the growing private authority of index providers in the age of passive asset management. Review of International Political Economy (2019).
- Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry. The Journal of Finance (2022).
- Determinants of common ownership: Exploring an information-based and a competition-based perspective in a global context. Journal of Business Research (2022).
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