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SUMMARY:PATIENT CAPITAL\, FIRM POLICIES\, AND REAL EFFECTS - Varun Sharma\
 , PhD candidate\, London Business School
DTSTART:20211005T120000Z
DTEND:20211005T131500Z
UID:TALK162190@talks.cam.ac.uk
CONTACT:Emily Brown
DESCRIPTION:This paper investigates whether and how investor composition a
 ffects firms’ product prices\, customer composition\, and market share. 
 I compile a micro-level dataset that links firms’ investors with the pro
 ducts firms sell and the underlying household customers of these products.
  Exploiting quasi-experimental variation\, I show that after experiencing 
 an increase in benchmark-constrained investors\, firms (i) set lower produ
 ct prices\, especially for products with lower market share\, (ii) expand 
 their customer base towards lower-income households\, and (iii) introduce 
 new products and diversify. I provide evidence that benchmark constrained 
 investors influence product markets by reducing firms’ cost of equity. U
 sing a model with product-level habits\, I show that in response to the re
 duction in equity issuance cost due to an increase in demand for firms’ 
 equity\, firms lower their product prices and forgo current profits in fav
 or of higher market share. Overall\, these results suggest that trends suc
 h as the growth of ETFs can expand affordable product choices for low-inco
 me households\, but potentially at the cost of lower market competition.
LOCATION:https://jbs-cam.zoom.us/j/86865549117?pwd=L1hXK3F3T0EycWI1azcrME1
 6VEo1QT09
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