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Overlapping Ownership Along the Supply Chain

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  • Freeman, Kayla M.

Abstract

I find overlapping institutional ownership (OIO) in a customer and supplier increases the duration of their supply chain relationship. Results are stronger when vertical holdup is more severe. A quasi-natural experiment around mergers of financial institutions provides causal evidence of OIO improving relationship survival rates. Concurrent with longer-lived relationships, valuations and innovation increase, consistent with OIO effects on relationship longevity being beneficial. I find evidence of OIO strengthening relationships via an internalization channel: With more OIO, partners cooperate more, with the supplier extending more trade credit. Overall, results indicate OIO strengthens vertical relationships by alleviating holdup problems.

Suggested Citation

  • Freeman, Kayla M., 2025. "Overlapping Ownership Along the Supply Chain," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 60(1), pages 105-134, February.
    • Handle: RePEc:cup:jfinqa:v:60:y:2025:i:1:p:105-134_4
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