Research

Working Papers

The Value of Firm Networks: A Natural Experiment on Board Connections, June 2021

joint with Ester Faia and Vincenzo Pezone

We present causal evidence on the effect of boardroom networks on firm value and compensation policies. We exploit a ban on interlocking directorates of Italian financial and insurance companies as exogenous variation and show that firms that lose centrality in the network experience negative abnormal returns around the announcement date. The key driver of our results is the role of boardroom connections in reducing asymmetric information. The complementarities with the input-output and cross-ownership networks are consistent with this channel. Using hand-collected data, we also show that network centrality has a positive effect on directors’ compensation, providing evidence of rent sharing.


Download — It is also available as SAFE Working Paper No. 269 and CEPR Discussion Paper No. 14591 — Read non-technical summary on VoxEU

The Employment Consequences of Automation and Offshoring: A Labor Market Sorting View, March 2021

joint with Ester Faia, Sebastien Laffitte and Gianmarco Ottaviano

We show, theoretically and empirically, that the effects of technological change associated with automation and offshoring on the labor market can substantially deviate from standard neoclassical conclusions when search frictions hinder efficient assortative matching between firms with heterogeneous tasks and workers with heterogeneous skills. Our key hypothesis is that better matches enjoy a comparative advantage in exploiting automation and a comparative disadvantage in exploiting offshoring. It implies that automation (offshoring) may reduce (raise) employment by lengthening (shortening) unemployment duration due to higher (lower) match selectivity. We find empirical support for this implication in a dataset covering 92 occupations and 16 sec- tors in 13 European countries from 1995 to 2010.


Download most recent version — It is also available as CEPR Discussion Paper No. 14787 or IZA Working Paper No.13267 — Read non-technical summary on VoxEU

Publications

Global Banking: Endogenous Competition and Risk Taking

joint with Ester Faia, Sebastien Laffitte and Gianmarco Ottaviano
European Economic Review, Vol. 133, April 2021

When banks expand abroad, their riskiness decreases if foreign expansion happens in destination countries that are more competitive than their origin countries. We reach this conclusion in three steps. First, we develop a flexible dynamic model of global banking with endogenous competition and endogenous risk-taking. Second, we calibrate and simulate the model to generate empirically relevant predictions. Third, we validate these predictions by testing them on an original dataset covering the activities of the 15 European global systemically important banks (G-SIBs). Our results hold across alternative measures of individual and systemic bank risk.


Download accepted version or download at the European Economic Review