Doron Y. Levit
The Wharton School
University of Pennsylvania
2457 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Institutional Affiliation: University of Pennsylvania
NBER Working Papers and Publications
|March 2019||Who’s Paying Attention? Measuring Common Ownership and Its Impact on Managerial Incentives|
with Erik P. Gilje, Todd Gormley: w25644
We derive a measure that captures the extent to which overlapping ownership structures shift managers’ incentives to internalize externalities. A key feature of the measure is that it allows for the possibility that not all investors are attentive to whether a manager’s actions benefit the investor’s overall portfolio. Empirically, we show that potential drivers of ownership overlap, including mergers in the asset management industry and the growth of indexing, could in fact diminish managerial motives. Our findings illustrate the importance of accounting for investor inattention and cast doubt on the possibility that the growth of common ownership has had a significant impact on managerial incentives.
|August 2014||Governance and Comovement Under Common Ownership|
with Alex Edmans, Devin Reilly: w20420
This paper studies the corporate governance and asset pricing implications of investors owning blocks in multiple firms. Common wisdom is that multi-firm ownership weakens governance because the blockholder is spread too thinly. We show that this need not be the case. In a single-firm benchmark, the blockholder governs through exit, selling her stake if the firm underperforms. With multiple firms, the blockholder may sell even a value-maximizing firm, to disguise her exit from another underperforming firm as being motivated by a portfolio-wide liquidity shock. This reduces the manager's effort incentives and weakens governance. On the other hand, governance can be stronger, because selling one firm and not the other is a powerful signal of underperformance. Common ownership leads to firms'...