Net Neutrality and Its' Repeal: Small Firms' Shareholders Shrug While Large Firms' Shareholders Turn

31 Pages Posted: 29 Jul 2019

See all articles by David Gabel

David Gabel

Department of Economics; CUNY Queens College

Joan Nix

Queens College

Bruce Mcnevin

Bank of America

Date Written: July 26, 2019

Abstract

The FCCs decision to repeal Net Neutrality governance of Internet traffic has not ended the debate over whether such protections are needed. This paper investigates the effects of changes in Net Neutrality regulation through an event study that unlike previous studies, employs as a baseline model, the Fama/French Three-Factor model to capture differences in rm size. The results are striking: for the most part, investors in both small and large firms are indifferent to changes in Net Neutrality rules. However, the selection of Chairman Pai is a signifi cant negative event for the group of largest rms. One explanation consistent with this finding is that the appointment of Pai gave a green light not only for Net Neutrality's repeal but also signalled that the FCC would take a favorable stance towards merger activity. Large firms in a given industry are more likely to operate as acquirers and therefore, more likely to realize losses in shareholder value.

Keywords: telecommunications policy, net neutrality, event study

JEL Classification: L13

Suggested Citation

Gabel, David and Nix, Joan and Mcnevin, Bruce, Net Neutrality and Its' Repeal: Small Firms' Shareholders Shrug While Large Firms' Shareholders Turn (July 26, 2019). Available at SSRN: https://ssrn.com/abstract=3427573 or http://dx.doi.org/10.2139/ssrn.3427573

David Gabel (Contact Author)

Department of Economics ( email )

Flushing, NY 11367
United States
718 997 5452 (Phone)

CUNY Queens College ( email )

Flushing, NY 11367
United States
718 997 5452 (Phone)

Joan Nix

Queens College ( email )

65-30 Kissena Blvd
Flushing, NY 11367-1597
United States

Bruce Mcnevin

Bank of America ( email )

One Bryant Oark
New York, NY 10021
United States

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