Trading Off Stakeholder Interests: Evidence from Antitrust Investigations
68 Pages Posted: 18 Feb 2021 Last revised: 8 Nov 2023
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: Suggested Citation