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Alberta Di Giuli is an Assistant Professor of Finance at ESCP Europe. Her research focuses on corporate social responsibility, corporate governance, mergers and acquisitions and family firms. Previously, Dr. Di Giuli was an Assistant Professor of Finance at ISCTE Business School, Lisbon, a research assistant at the London School of Economics and a visiting fellow at Harvard Business School. She received her PhD and MSc in Finance from Bocconi University, Milan.
“Are Red or Blue Companies More Likely to Go Green? Politics and Corporate Social Responsibility” (with Leonard Kostovetsky, University of Rochester)
We examine whether the political leanings of a firm’s stakeholders affect its behavior in terms of corporate social responsibility (CSR). Using firm-level CSR ratings from Kinder, Lydenberg, Domini (KLD), we find that firms score higher on CSR when they have Democratic rather than Republican founders, CEOs, and directors, and when they are headquartered in Democratic rather than Republican-leaning states. We estimate that CSR costs Democratic-leaning firms approximately $20 million more in annual SG&A expenses than Republican-leaning firms ($80 million more within the sample of S&P500 firms), representing about 10% of net income. We find little evidence that our results can be explained by reverse causality or self-selection.
“The Effect of Stock Misvaluation and Investment Opportunities on the Method of Payment in Mergers”
Previous title: “The Determinants of the Method of Payment in Mergers”
This paper tests the effect of firms’ mispricing and investment opportunities on the method of payment in mergers. Using a new proxy for investment opportunities and a sample of 1,551 mergers completed between 1990 and 2005 among US publicly traded firms, I find that acquirers lead the decision on the method of payment, exploiting short-term market mispricing (in line with both Shleifer and Vishny (2003) and Rhodes-Kropf and Viswanathan (2004) models). However, target managers believe in the quality of the merger and care about the long-term value of the merged entity’s shares (as predicted by Rhodes-Kropf and Viswanathan (2004) and contrary to Shleifer and Vishny (2003)). I also find that better investment opportunities lead to greater use of stock.
“Are Small Family Firms Financially Sophisticated?” (with Stefano Caselli and Stefano Gatti), Journal of Banking and Finance, 35 (11), 2931–2944, 2011
We study the drivers of financial sophistication in small family firms. Sophistication is defined as the use of non-basic financial products such as options, swaps, debt restructuring, and mergers and acquisitions (M&A) advisory services. Our analysis is based on a unique dataset with detailed information on 187 Italian family firms. We find that the main drivers of financial sophistication are: 1) the generation that currently owns the firm; 2) the presence of a non-family CFO; and 3) the existence of a non-family shareholder. We analyze the impact of these factors on the following four classes of non-basic financial products: corporate finance, cash management, corporate lending and risk management. Our results can be used to determine the characteristics of financially sophisticated family firms and whether their corporate governance and ownership structure increase the use of non-basic financial products.
“Does the CFO matter in family firms? Evidence from Italy” (with Stefano Caselli), The European Journal of Finance, 16 (5), 381-411, 2010
Using data from 708 small and medium Italian firms during the period of 2002-2004, we find that in family firms a nonfamily CFO drives firm performance in a positive direction. Family firms with a nonfamily CFO perform better than both family firms with a family CFO and nonfamily firms. The best performance is achieved when the CEO is a family member and the CFO is an outsider (nonfamily). An examination of family firms across generations shows that a nonfamily CFO always has a positive effect on firm performance, while a family CEO seems to add value only in the first generation. Our study contributes to the literature on family firms by determining how the presence of a nonfamily CFO has an impact on firm performance. We also contribute to the literature on agency theory by showing that in small family firms: a) having a family as majority shareholder is not detrimental to firm performance; and b) a nonfamily CFO might serve to mitigate any ineptness of descendant CEOs while retaining ownership and management in the hands of family heirs, thus avoiding the conflict of interest between family ownership and management.