Abstract
We study the credit market implications of coowners hip: multiple firms sharing a common blockholder. We claim that the financial conditions of these firms signal the market about the controlling ability of the owner. In a 2001‐2008 sample of public US corporations, we show that coownership creates indirect financial link s between coowned firms. An increase in the credit ri sk of peer firms raises the firm’s credit risk. Mor eover, the relationship between peers becomes weaker (stronger) when the coowner loses (gains) control. Coownership also has implications for the firm’s borrowing cost s and its sensitivity to marketwide shocks.
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