Common-Ownership Versus Cross-Ownership: Evidence from the Automobile Industry*

Abstract

Overlapping ownership has gained considerable momentum in the last decades, yet little is known about the role of its sources. We quantify the relative importance of common-ownership (by shareholders external to an industry) and cross-ownership (by firms within the industry). We focus on the global automobile industry, over the period 2007–2021, and document that common-ownership links constitute between 31% and 39% of the equity ownership of automobile manufacturers, while cross-ownership links amount to 6%–9%. We show that not accounting for these relatively modest cross-ownership links has important implications: it can increase the average weight assigned by managers to the profit of competitors by between 33% and 68%.