||Puppets Fight as Puppet Masters Wish : The Influence of Shareholder Overlap on Interfirm Rivalry
19 , 2015-03-30
If two competing firms receive influence from the same large shareholders, how do they compete? From the viewpoint of competitive dynamics and agency theory, I investigate the impact of overlapping shareholders of two competing firms on their competitive behavior. The overlapping shareholders of two competing firms will attempt to reduce the intensity of their competitive activity because they can increase economic surpluses from the competing firms by intentionally creating the stability of rivalry. Accordingly, competitive actions between two competing firms will become less intensive as their overlapping shareholders acquire more power over the firms. By using data on pairs of leaders and challengers in 13 Japanese industries in which they have engaged in lasting head-to-head competition, found support for the hypotheses.