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Department ofEconomics


How mixed ownership affects decision making in turbulent times: Evidence from the digital revolution in telecommunications

Christian Helmers, David Wehrheim, Hakki Dogan Dalay, and Andrea Fosfuri

Journal of Corporate Finance 64, (Article 101626), October 2020

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This study examines how the ownership structure of corporations shapes their responses to discontinuous technological change. We analyze whether mixed ownership, a situation where following privatization a company's shares are held both privately and by the government, is associated with less innovation in response to discontinuous technological change. We argue that mixed ownership is associated with governance conflicts that affect a company's ability to respond to the challenges posed by discontinuous technological change. Our empirical analysis uses data on European telecommunications operators for the period 2000–2016 when they faced sweeping technological change due to the advent of Internet-based communication services. Our baseline result suggests that operators with mixed ownership file around 70% fewer patents in relevant digital technologies than companies that are fully private or where the government owns a majority of shares. We find that mixed ownership also affects negatively the acquisition of externally developed technology.

LSB Research, ECON, Christian Helmers, 2020