FACULTY RESEARCH IMPACTS
Schulich Professor’s Research Wins European Finance Association Award Yelena Larkin
In August 2020, Yelena Larkin received a prestigious Pagano-Zechner award for the best non-investments paper published in the Review of Finance journal in 2019–2020. The paper, “Are US Industries Becoming More Concentrated?”, is a joint work with Gustavo Grullon from Rice University and Roni Michaely from the University of Hong Kong. The paper demonstrates that despite popular belief, U.S. markets have become more concentrated over the past two decades. Firms that operate in industries with the largest increase in concentration enjoy wider profit margins, close more profitable M&A deals, and experience better stock returns. Taken together, the results indicate that product markets have
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undergone a structural shift that has potentially weakened competition. Larkin’s ongoing agenda continues investigating the outcomes of product market consolidation. Combined with other evidence, the increase in concentration and higher profit margins, enjoyed primarily by the shareholders, are an alarming sign and are unlikely to be an indicator of overall economic improvement. “Today we live in a world in which a handful of ‘superstar firms’ have grown to dominate their industries,” said Larkin.
“Importantly, this is not a purely high-tech phenomenon: the increase in concentration affects around threequarters of the US industries.” She believes that the outbreak of COVID-19 has only exacerbated the trend, leading to attrition of small businesses, while simultaneously increasing the dominance of large corporations. “This award proves the profession finds my research relevant and impactful. It is precious to know that my excitement and faith in the main message of this research work are recognized and shared by others,” Larkin said.
