any response to this ? Oxford ?
(Impossibility of) Replicating Schmalz's work on "common-ownership"
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Silly hypothesis. Gets past peer review because academics never make things pass a smell test or don’t care about simple things like “is your data just total BS to begin with?”. Gets cited a ton. Turns out to be total nonsense.
Welcome to most of academic work.
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Common ownership bubble finally bursting...?
Saw this posted by TC on Marginal Revolution:
Is common stock ownership really such a big deal?
We investigate the relation between common institutional ownership of the firms in an industry and product market competition. We find that common ownership is neither robustly positively related with industry profitability or output prices nor robustly negatively related with measures of non-price competition, as would be expected if common ownership reduces competition. This conclusion holds regardless of industry classification choice, common ownership measure, profitability measure, non-price competition proxy, or model specification. Our point estimates are close to zero with tight bounds, rejecting even modestly-sized economic effects. We conclude that antitrust restrictions seeking to limit intra-industry common ownership are not currently warranted.
That is from a new paper by Andrew Koch, Marios A. Panayides, and Shawn Thomas, forthcoming in the Journal of Financial Economics. A useful corrective to some of the exaggerations I have seen floating around.
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Common ownership bubble finally bursting...?
Saw this posted by TC on Marginal Revolution:
Is common stock ownership really such a big deal?
We investigate the relation between common institutional ownership of the firms in an industry and product market competition. We find that common ownership is neither robustly positively related with industry profitability or output prices nor robustly negatively related with measures of non-price competition, as would be expected if common ownership reduces competition. This conclusion holds regardless of industry classification choice, common ownership measure, profitability measure, non-price competition proxy, or model specification. Our point estimates are close to zero with tight bounds, rejecting even modestly-sized economic effects. We conclude that antitrust restrictions seeking to limit intra-industry common ownership are not currently warranted.
That is from a new paper by Andrew Koch, Marios A. Panayides, and Shawn Thomas, forthcoming in the Journal of Financial Economics. A useful corrective to some of the exaggerations I have seen floating around.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2965058So per footnote 9 of the working paper -- they say you can't rely on Thomson Institutional Ownership data (S34) after around 2010-2012 and no one is fixing the problem.
Their paper ends in 2012 (a long time ago for a paper being published in 2020). And from the WRDS documentation they link to in their footnote 9, it seems like they should have ended in 2010 instead of 2012.
So were stuck forever in only being able to go forward to 2010 for Thomson institutional ownership (S34) data? Wonderful.
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Not sure whether this paper has been mentioned before (not going to read 8 pages): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336343
"A growing body of evidence concludes that common ownership has caused cooperation among firms to increase and competition to decrease. We take a closer look at four different approaches the literature has used to identify these effects. We find that the effects the literature has attributed to common ownership are caused by other factors, such as differential responses of firms (or industries) to the financial crisis. We propose a modification to one of the previously used instruments, which is less sensitive to these issues. Using this to re-evaluate the link between common ownership and multiple firm outcomes, we find little robust evidence that common ownership affects firm behavior."
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Not sure whether this paper has been mentioned before (not going to read 8 pages): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336343
"A growing body of evidence concludes that common ownership has caused cooperation among firms to increase and competition to decrease. We take a closer look at four different approaches the literature has used to identify these effects. We find that the effects the literature has attributed to common ownership are caused by other factors, such as differential responses of firms (or industries) to the financial crisis. We propose a modification to one of the previously used instruments, which is less sensitive to these issues. Using this to re-evaluate the link between common ownership and multiple firm outcomes, we find little robust evidence that common ownership affects firm behavior."Yeah, Schmalz will discuss the paper at FIRS this year. It's going to be epic! Will be sitting in the last row eating popcorn.
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Not sure whether this paper has been mentioned before (not going to read 8 pages): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336343
"A growing body of evidence concludes that common ownership has caused cooperation among firms to increase and competition to decrease. We take a closer look at four different approaches the literature has used to identify these effects. We find that the effects the literature has attributed to common ownership are caused by other factors, such as differential responses of firms (or industries) to the financial crisis. We propose a modification to one of the previously used instruments, which is less sensitive to these issues. Using this to re-evaluate the link between common ownership and multiple firm outcomes, we find little robust evidence that common ownership affects firm behavior."Yeah, Schmalz will discuss the paper at FIRS this year. It's going to be epic! Will be sitting in the last row eating popcorn.
nobody will show up at the FIRS due to risk of corona virus
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Not sure whether this paper has been mentioned before (not going to read 8 pages): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336343
"A growing body of evidence concludes that common ownership has caused cooperation among firms to increase and competition to decrease. We take a closer look at four different approaches the literature has used to identify these effects. We find that the effects the literature has attributed to common ownership are caused by other factors, such as differential responses of firms (or industries) to the financial crisis. We propose a modification to one of the previously used instruments, which is less sensitive to these issues. Using this to re-evaluate the link between common ownership and multiple firm outcomes, we find little robust evidence that common ownership affects firm behavior."Yeah, Schmalz will discuss the paper at FIRS this year. It's going to be epic! Will be sitting in the last row eating popcorn.
nobody will show up at the FIRS due to risk of corona virus
Yeah it was cancelled. Funny what great lengths Schmalz would go to just to avoid the presentation of a critical paper. No regard for human life whatsoever
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Notice that is was a corporate person who actually looked at the data source and tried to understand how the 13F data were reported during airline bankruptcy periods.
Why do you never see academics do this? They spend tons of time examining and tearing apart models but rarely ever dig into the actual data to make sure it was compiled correctly.