Institutional shareholding, common ownership and productivity
A cross-country analysis
The increase in institutional ownership, the shift towards passive portfolio management
and the rise of common ownership have transformed OECD countries financial markets
in the last decades. The paper investigates the potential consequences of these transformations
on firm’s productivity, using granular data on firms financial and ownership structure
as well as a variety of econometric methods. The analysis suggests that the rise of
institutional investors is overall not a major concern from a productivity standpoint:
firms displaying higher institutional ownership tend to have higher productivity levels
and growth rates compared to their peers, though the positive relationship tends to
vanish when institutional investors’ time horizon is short. Moreover, inter-industry
common ownership is related to higher firm-level productivity and this positive relation
is stronger for firms operating in intangible-intensive and digital sectors, potentially
hinting to an easing of vertical relationships and/or technological spillovers when
firms operating in different sectors are owned by the same equity holders. On the
contrary, the correlation with intra-industry common ownership appears negative, though
not always significantly, potentially due to lower competition.
Published on August 04, 2023
In series:OECD Economics Department Working Papersview more titles