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

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%.