Job Market Paper
This paper studies the role of the matching between firms and directors appointed to their boards in determining firm outcomes. I apply a finite-mixture random-effects model to estimate the contribution of unobserved firm and director heterogeneity while explicitly allowing for an interaction between the two to estimate the quality of the match between board members and firms. Results reveal that positive complementarities drive positive sorting between firms and their directors. Using hand-collected data and textual analysis to build a large dataset on directors' skills and qualifications, I find in particular directors with specialized skill sets to be associated with higher complementarities. In contrast, consistent with the idea of knowledge hierarchies in the firm, CEOs and CFOs tend to be generalists relying on directors' advice. Finally, I exploit unexpected deaths of directors to establish that boards, where productivity is concentrated to a few highly complementary directors, have a positive causal effect on firm value and firm performance. The paper thereby offers new evidence on the organizational structure within the firm and its impact on firm performance.
The Value of Firm Networks: A Natural Experiment on Board Connections, June 2021
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.
On the Employment Consequences of Automation and Offshoring: A Labor Market Sorting View, March 2021
We argue that automation may make workers and firms more selective in matching their specialized skills and tasks. We call this phenomenon “core-biased technological change”, and wonder whether something similar could be relevant also for offshoring. Looking for evidence in occupational data for European industries, we find that automation increases workers’ and firms’ selectivity as captured by longer unemployment duration, less skill-task mismatch, and more concentration of specialized knowledge in specific tasks. This does not happen in the case of offshoring, though offshoring reinforces the effects of automation. We show that a labor market model with two-sided heterogeneity and search frictions can rationalize these empirical findings if automation strengthens while offshoring weakens the assortativity between workers’ skills and firms’ tasks in the production process, and automation and offshoring complement each other. Under these conditions, automation decreases employment and increases wage inequality whereas offshoring has opposite effects.
Global Banking: Endogenous Competition and Risk Taking
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.