Working Papers

Common Ownership and the Market for Technology 

Using information on U.S. patent reassignments, this paper establishes economically and statistically significant effects of common institutional ownership on the reallocation of technological knowledge between publicly traded companies. The effect is strongest for technologies associated with recent innovations. Higher common ownership with providers leads to more innovations and higher market capitalization growth by adopters. A new identification strategy based on pure-indexer ownership establishes causality. The observed effects are consistent with a matching model in which common owners mitigate moral hazard linked to know-how transmission, increasing transfer quality. The results shed light on the impact of common ownership on managerial decision-making.

Institutional Blockholders and Corporate Innovation - with Bing Guo, David Pérez-Castrillo, and Anna Todrà-Simats 

Institutional investors' ownership in public firms has become increasingly concentrated in the last decades. We study the heterogeneous effects of large versus more dispersed institutional owners on firms' innovation strategies and their innovation output. We find that large institutional investors induce managers to increase spending in internal R&D by reducing short-term pressure. However, to avoid empire building and dilution, large institutional investors prevent acquisitions, which reduces firms' investment in external innovation. The overall effect on firms' future patents and citations is negative. By acquiring less innovation from external sources, firms reduce the returns of their investment in internal R&D, jeopardizing their total innovation output. We use the mergers of financial institutions as exogenous shocks on firms' institutional ownership concentration. Our findings complement the previously found positive effects of institutional ownership on firm innovation and indicate that the effects become negative when institutional investors become large owners.


Automation and Sectoral Reallocation - with Tommaso Santini and Eugenia Vella. Series - Journal of the Spanish Economic Association, special issue: Juan J. Dolado. (2021)

Empirical evidence in Dauth et al. (J Eur Econ Assoc, 2021) suggests that industrial robot adoption in Germany has led to a sectoral reallocation of employment from manufacturing to services, leaving total employment unaffected. We rationalize this evidence through the lens of a general equilibrium model with two sectors, matching frictions and endogenous participation. Automation induces firms to create fewer vacancies and job seekers to search less in the automatable sector (manufacturing). The service sector expands due to the sectoral complementarity in the production of the final good and a positive wealth effect for the household. Analysis across steady states shows that the reduction in manufacturing employment can be offset by the increase in service employment. The model can also replicate the magnitude of the decline in the ratio of manufacturing employment to service employment in Germany between 1994 and 2014.