Does Common Ownership Really Prompt Managers to Compete Less?

How common ownership affects competition is a source of acute disagreement among scholars and policymakers, with some who believe common ownership depresses competition seeking antitrust law reforms that would significantly constrain how investment funds operate. Neglected in this vigorous debate, however, is a careful analysis of how firm managers – the persons who in the first instance actually make the decisions that determine an industry’s competitiveness – would act differently in the presence of common ownership.

We conduct that necessary analysis in a new article, available here, in which we combine lessons from corporate governance scholarship and industrial organization … Read more

Does Insider Trading Law Change Behavior?

Despite the extensive scholarship on insider trading, relatively little attention has been directed to a basic but fundamental question:  Does insider trading law actually affect the amount of insider trading?  In a new article, available here, I seek to empirically evaluate that question by leveraging a change in insider trading law that occurred in 2014 when the Second Circuit issued its seminal decision in United States v. Newman, which substantially limited the scope of tippee liability.  The article provides strong empirical evidence that changes in insider trading law do affect the amount of insider trading, sometimes dramatically.

The … Read more

Common Ownership, Institutional Investors, and Antitrust

One of the most important issues in antitrust at the moment is whether institutional investors’ significant equity holdings in U.S. companies are substantially harming competition in violation of the antitrust laws. In a new article, available here, I conduct a systematic analysis of the competitive effects of common ownership and show that, while there are economically sound reasons why common ownership can generate substantial competitive harm, there are also economically sound reasons why, in a given market, it may not. For that reason, the mere fact that institutional investors’ significant equity holdings generate high levels of common ownership by … Read more