Seminar in Financial Economics - Gianpaolo Parise

Seminar

Family First? Nepotism and Corporate Investment

Gianpaolo Parise, an Associate professor at EDHEC Business School, will be presenting at the Finance Seminar series.

 

Family First? Nepotism and Corporate Investment

 

The abstract:

An open question in financial economics is why firms invest less than they should relative to their available investment opportunities. Notably, an element that economic research overlooks is how firms select the individuals in charge of investment decisions. This paper explores how the presence of kinship ties among high-ranking employees affects corporate investment. To measure kinship ties, we build a unique dataset of connections among individuals hired in strategic positions by the same firm. We address endogeneity concerns using the heterogeneity in ancestries and family arrangements across U.S. counties to instrument kinship ties. We find that firms headquartered in counties where locals inherited stronger family values hire more relatives and we show that the presence of kinship ties hinders investment. Overall, we argue that lower investment levels arise because of nepotism: workers hired on the basis of kinship ties are less skilled and have a lower incentive to exert effort.

 

23 October 2018
14:15–15:30

Venue

Ideon Alfa1:4013
Scheelevägen 15B
223 63 Lund

Contact

Olga Balakin

olga.balakina@nek.lu.se

Published by: katarina.csanta@ehl.lu.se  |  2018-11-06