We examine the relation between passive ownership and financial reporting quality measured by Beneish's (1999) earnings' manipulation score (M-score). We find that passive ownership is negatively related to M-score and to the likelihood of being designated as a “manipulator” firm. However,...

The corporate governance literature has shown that self-interested controlling owners tend to divert corporate resources for private benefits at the expense of other shareholders. Such behavior leads the controlling owners to prefer long maturity debt to short maturity debt, to avoid frequent...

Asset owners (principals) typically do not manage their own investments and leave this job to delegated managers (agents). What is best for the asset owner, however, is usually not best for the fund manager. Additional agency conflicts arise when the asset owner does not know the quality and...

This paper analyzes the relation between institutional investment duration and corporate governance using a new metric of investment duration that accounts for firm-specific investment durations of each institution. We conjecture that institutional investors that hold a firm's shares for a...

Horizontal shareholding exists when significant shareholders have stock in horizontal competitors. (It is often imprecisely called "common shareholding," but that term can also apply when shareholders own stock in two noncompeting corporations. It differs from "cross-shareholding," which...

This Article shows that new economic proofs and empirical evidence provide powerful confirmation that, even when horizontal shareholders individually have minority stakes, horizontal shareholding in concentrated markets often has anticompetitive effects. The new economic proofs show that,...

Some scholars have argued that the phenomenon known as common ownership, which refers to an investor's simultaneous ownership of small stockholdings in several competing companies, is anticompetitive and prohibited by the U.S. antitrust laws. These proponents target in particular large...

This paper shows how network theory can improve our understanding of institutional investors' voting behavior and, more generally, their role in corporate governance. The standard idea is that institutional investors compete against each other on relative performance and hence might not cast...

Prior evidence suggests that managers learn indirectly from stock prices, which contain private information impounded by informed investors' trades. However, stock price is an indirect aggregate signal, which is likely to be insufficient for managerial learning. I propose that managers seek out...

Common ownership exists when investors concurrently hold partial and significant shares in related firms. In this paper, I compile, document, and taxonomize 30 separate cases of intervention to demonstrate how common owners influence firm behavior. Although previous literature has identified a...