Family Ownership and Trust During a Financial Crisis

Abstract : By facilitating business transactions, generalized trust may alleviate the impact of economic downturns on firm performance. We advance this literature by studying how trust influences a firm’s reaction to a crisis depending on the ownership structure. Exploiting geographic variations in trust across Italian regions and the occurrence of the financial crisis in a difference-in-differences setting, we show that while trust alleviates the negative effect of a crisis on the profitability of non-family firms, it aggravates the negative effect for family firms. Trust is especially harmful for the profitability of firms with a high level of family representation in board positions. Studying the financing channel, we show that trust impairs the ability of family firms to access debt from suppliers in times of crisis.

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Does Private Ownership Reduce Political Distortions? Evidence from U.s. Electric Utilities

Abstract : Politics is believed to distort decisions in regulated private firms as well as in government enterprises. In order to compare the magnitude of these distortions, I examine one of the very few large U.S. industries where both for-profit and government enterprises sell goods to the public: electric utilities. I follow the existing literature in measuring political distortions in two ways: differences between government decisions in election years versus in non-election years, and governments' inability to quickly adapt to change. Using comprehensive U.S. data for the years 1964 through 2014, I find that for-profit electricity rates are more likely to be manipulated before elections, but are more responsive to costs, compared to government electricity rates. Thus private ownership need not reduce political distortions, and may actually increase them. I further provide a theoretical framework that explains the findings.

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Ownership of Cultural Goods

Abstract : We examine the return of cultural goods to their home country. The cultural good can be unified or separated into two countries. We show that nonintegration and separation of the cultural good is initially optimal when the host invests in the restoration of the cultural good and his unique restoration skill makes him an indispensable trading partner. The return of the cultural good to its home country and shift of ownership becomes optimal when the restoration stage is over and the host’s investment changes to human capital, which reduces the spillover from his investment, and technological changes make him a relatively dispensable trading partner. Alternatively, the cultural good can be returned due to changes in the valuation of the cultural good. The return can be triggered when unification is efficient but it is possible that the return is triggered even when separation is efficient.

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