Common ownership in the CAC40

Abstract

The objective of this dissertation is to verify whether common ownership is significant in the CAC40, and whether it is correlated with the returns of companies in this index. In the presence of a shareholder structure characterized by the coexistence of shareholders with and without shares in rival companies, the manager will not seek to maximize the company's profit, but a weighted average of the return of its shareholders, in order to manage the potential conflict of interests between them. This implies assigning, in the manager's decision making, a weight to the profit of rival companies in which the shareholders hold stakes. This dissertation quantifies this weight for the CAC40 companies and evaluates, using the Fama-French three-factor model, whether there is a link between companies' returns and this weight. The results obtained suggest that common ownership is not very significant in CAC40, but that there are companies for which the weight assigned to rivals' profit influences returns.

Date of Award	8 Jul 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Ribeiro (Supervisor)