Cross-ownership and portfolio choice

• 成果类型: Article
• 署名作者: Galeotti, Andrea; Ghiglino, Christian
• 署名单位: University of London; London Business School; University of Essex
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2021.105194
• 发表日期: 2021
• 关键词: Financial networks; Separation between ownership and control; Bow-tie; diversification; Concentration; risk taking

摘要

Cross-ownership smooths firms' idiosyncratic shocks but affects their portfolio choice and, therefore, their risk-taking position. The classical intuition on the role of pooling risk in raising welfare is valid when ownership is evenly dispersed. However, when the ownership of some firms is concentrated in the hands of a few others, deeper integration leads to excessive risk-taking and volatility and, consequently, it results in lower aggregate welfare. (C) 2021 Elsevier Inc. All rights reserved.