Corporate Equity Ownership, Investment, and Product Market Relationships

Matthew J. Clayton*, Bjørn N. Jørgensen

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


This paper examines the effect of corporate equity ownership on investment when firms have product market relationships. Firms have incentives to hold long equity positions when their products are complements. These equity positions induce the firms to increase their real investment expenditures. In contrast, firms have incentives to hold short equity positions when their products are substitutes. These short positions commit the firms to a more aggressive product market stance, and also result in increased real investment expenditures. Our model offers an explanation for the empirical relationship between the establishment of corporate equity stakes and increased investment spending documented by Allen and Phillips (2000).
Original languageEnglish
JournalJournal of Corporate Finance
Issue number5
Pages (from-to)1377-1388
Number of pages12
Publication statusPublished - 2011
Externally publishedYes


  • Strategic interactions
  • Investments
  • Corporate equity holdings

Cite this