The Committee on Capital Markets Regulation seeks to clarify the state of the current debate on common ownership of equities by institutional owners and the potential anti-competitive behavior associated with such ownership. Given that the potential responses to the alleged antitrust concerns could prove quite harmful to savers and retail investors, it is important to be clear about what the economic research has and has not established to date.
The paper focuses on the claims of three research papers that examine the airline industry, the banking industry, and executive compensation, each arguing that common ownership leads to anti-competitive behavior. Overall, the Committee finds that this common ownership research reaches conclusions based on questionable research methodologies and that, given the concerns with the research design, the findings in the three papers are not robust to the critiques of other academics and are, therefore, largely inconclusive.
The paper also identifies the increasing number of academic studies that report results contradicting those found in the original three common ownership papers. This subsequent research collectively finds that no anti-competitive effects of common ownership can be found in the data.
We hope that the Committee’s paper contributes to the common ownership discussion.
Read the full statement here.