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Common Ownership in America: 1980–2017

Abstract: This paper measures the implications of the common ownership hypothesis for S&P 500 firms between 1980 and 2017. In the time series, the growth of common ownership is driven by the broad rise of diversified investment strategies, rather than well–known investment managers. In the cross section, there is substantial variation that can be traced, both in the theory and the data, to observable firm characteristics — partic- ularly retail investor share. Finally, we show that the theory predicts incentives for expropriation of undiversified shareholders via tunneling, even in the Berle and Means (1932) world of the widely held firm.