Corporate Ownership and Antitrust Violations
Abstract: We study how corporate ownership shapes the firms’ likelihood of being involved in antitrust indictments. Using data from Italy, we show that family-owned firms are less likely than firms with any other ownership structure to commit antitrust violations. To achieve identification, we exploit a law change that made it easier to transfer family control. Studying the mechanisms at play, we find that family firms are especially less likely to commit antitrust violations when they feature a more prominent size relative to the city of headquarter, which magnifies reputational concerns. Next, using a difference-in-differences setting we show that family firms involved in antitrust violations appoint more family members in executive positions in the aftermath of the indictment. Moreover, these firms invest less and curb equity financing as compared to nonfamily firms. Collectively, our findings suggest that family control wards off reputational damages but at the same time it weakens the ability to expand in order to keep up with fiercer competition following the dismantlement of an anticompetitive practice.
