Trading Off Stakeholder Interests: Evidence from Antitrust Investigations

68 Pages Posted: 18 Feb 2021 Last revised: 8 Nov 2023

See all articles by Giacinta Cestone

Giacinta Cestone

Bayes Business School, City University London; ECGI

Jiaying Li

Bayes Business School, City University of London

Paolo F. Volpin

Drexel University - Bennett S. LeBow College of Business; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); City University London - Faculty of Finance

Date Written: April 7, 2021

Abstract

We investigate the redistribution effects among firm stakeholders of increased antitrust scrutiny. Using the cases opened by the European Commission between 1991 and 2019, we find that cartel investigations temporarily reduce profits for all firms in the affected industry and increase profits for their customers. In response to the negative shock to their profitability, firms engage in intense restructuring: they undertake mass layoffs and reduce employment; to lesser extents they increase leverage, cut investment and sell assets. The effects tend to be concentrated in firms that are less productive and closer to financial distress at the time of the shock.

Keywords: Antitrust, Cartels, Mass Layoffs, Corporate Restructuring, Stakeholders

JEL Classification: G34, L41, J63

Suggested Citation

Cestone, Giacinta and Li, Jiaying and Volpin, Paolo F., Trading Off Stakeholder Interests: Evidence from Antitrust Investigations (April 7, 2021). Available at SSRN: https://ssrn.com/abstract=3773448 or http://dx.doi.org/10.2139/ssrn.3773448

Giacinta Cestone

Bayes Business School, City University London ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

ECGI ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Jiaying Li

Bayes Business School, City University of London ( email )

London, EC2Y 8HB
Great Britain

Paolo F. Volpin (Contact Author)

Drexel University - Bennett S. LeBow College of Business ( email )

101 N. 33rd St.
Philadelphia, PA 19104
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

City University London - Faculty of Finance ( email )

London, EC2Y 8HB
Great Britain

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