Common Ownership Around the World (Academic research)

Summary

• The study analyzes common ownership across 49 countries between 2005 and 2023, covering economies that represent 86% of global GDP.p.3
• Average pairwise implied profit weights (κ) more than doubled in the median country over the sample period and more than tripled in the United States.p.3
• In 2023Q4, average intra-industry implied profit weight (κ) reached 0.036 in the median country and 0.155 in the United States.p.6
• Average pairwise κ for top-tercile firms by 2023 reached 0.564 in the United States, 0.057 in the Euro Area, 0.121 in Japan, and 0.171 in the United Kingdom.p.7
• The Big Three institutional investors (BlackRock, Vanguard, State Street) became the largest shareholder in over 35% of U.S. public companies by 2023, up from under 3% in 2005.p.7

Key insights

1. Common ownership exhibits a steep size gradient across all regions, with levels roughly three times higher among top-tercile firms compared to the median firm.p.6
2. The global increase in common ownership is primarily driven by concentration within institutional investing, specifically the growing breadth of portfolio holdings by the Big Three.p.3
3. Stronger antitrust enforcement and abuse-of-dominance regulations are associated with lower levels of common ownership across countries.p.31
4. Cumbersome administrative procedures and longer timeframes required to start a business correlate with higher levels of common ownership.p.32
5. Strict employment protection laws and strong collective labor rights are associated with lower common and universal ownership.p.33
6. Government-mandated ESG disclosure requirements are associated with lower ownership concentration across firms.p.35