Parise, Gianpaolo
[Verfasser:in]
;
Leone, Fabrizio
[Sonstige Person, Familie und Körperschaft];
Sommavilla, Carlo
[Sonstige Person, Familie und Körperschaft]
Erschienen in:Paris December 2016 Finance Meeting EUROFIDAI - AFFI
Umfang:
1 Online-Ressource (44 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.2784287
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 1, 2017 erstellt
Beschreibung:
In this paper, we construct a novel measure of nepotism and explore its implications for firm value. We document that 35% of U.S. public firms employ relatives in top jobs. Using our measure, we show that nepotism decreases firm value: high-nepotism stocks underperform low-nepotism stocks by 7.4% annually. One-fourth of this underperformance is explained by the price reaction to the announcement of predictably negative ``unexpected'' earnings. At the firm level, nepotism signals low human capital value, as high-ranking employees are less qualified and exert insufficient effort. We conclude that the market overlooks public signals on firm human capital