| Summary: | <p>Based on a novel, comprehensive data set of U.S. corporations' ownership structures between 2000 and 2020, this thesis studies the incentives and effects of shareholder governance in U.S. corporations. Chapter 1 describes the data set construction and ownership structures of the largest U.S. firms. Different from previous work, our data set comprises all investors reporting common stock holdings to the Securities Exchange Commission. The analysis uncovers an unexpectedly high degree of heterogeneity in ownership structures and portfolio incentives. The fraction of control held by universally or within-industry diversified investors, who theoretically benefit from joint firm value maximization, increases substantially between 2000-2020. Highly diversified hedge fund activists and consolidation among asset managers are driving the growth of universal and common ownership, while undiversified corporate insiders and non-financial blockholders reduce both. Chapter 2 expands the analysis of shareholder governance into the effects of common ownership on corporate productivity. In theory, ownership of competing firms can soften competition and lead to higher markups or cause weaker managerial incentives and thereby lower productivity. Using panel regressions and an event study, we find that increased common ownership incentives indeed lead to lower productivity via less performance-sensitive managerial pay. Chapter 3 provides unprecedented evidence of activists' diversified portfolio holdings and incentives. Analyses of abnormal returns suggest that activist holdings of targeted and competing firms jointly outperform target-only holdings. An event study indicates that a reduction in product differentiation between targets and activist owned competitors, alongside profitability and market share increases at these competitors could be the origin of financial excess returns.
This dissertation contributes to the empirical evidence of corporations' ownership structures and governance outcomes, demonstrating the need to assess governance effects considering all shareholders and diverging portfolio incentives.</p>
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