Talk given by Roni Michaely – “Are industries becoming too concentrated? ”
Since the late 1990s, over 75% of U.S. industries have experienced an increase in concentration levels. We explore the implications of this increased concentration. We find that firms in industries with the largest increases in product market concentration show higher increase in profits and in profit margins. Those firms are also able to be engaged with more profitable mergers and acquisitions deals. At the same time, we find no evidence for a significant increase in operational efficiency. Taken together, our results suggest that market power is becoming an important source of value. We also show that the higher profit margins associated with an increase in concentration are reflected in higher returns to shareholders. Overall, results suggest that product markets have undergone a shift that has potentially weakened competition across the majority of industries. We also explore some potential reason for this trend.
19h00 : Dinner (CHF 15.-)
19h45 : Talk (free)
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Professor Michaely is SFI professor of finance at Geneva Finance Research Institute at the University of Geneva. Before that he was a Finance professor at Cornell University. He teaches corporate finance and entrepreneurial finance at Geneva School of Economics and Manathe Cornell-Tech program in NYC. Professor Michaely’s research interests are in the areas of empirical corporate finance, payout policy, corporate governance, entrepreneurial finance, and FinTech. His current research focuses conflict of interest in the capital markets, corporate payout policy, the structure and behavior of both public and private firms as well as some aspects of FinTech. He was recently recognized as one of the most cited people in finance, and just finished serving a 4-years term as an associate editor for the Journal of Finance.