Research

Working Papers

"Corporate Flight from Uncertainty and Business Dynamism", with Mircea Epure (UPF & BSE) - R&R at Management Science (Strategy)

Abstract: We examine the impact of corporate headquarters relocations prompted by institutional uncertainty on business dynamism. We show that firms relocating their headquarters due to the 2017 Catalan independence referendum accounted for a quarter of the total assets in the region. New firm entry rates declined in the region after the referendum, and new ventures exhibited lower growth in total assets, sales, and employment. Notably, within the region, new business entry rates declined less in the areas from which large firms relocated, suggesting fewer occupational opportunities. However, the growth of these new businesses was even lower. These results are stronger in industries with lower market concentration (indicating lower entry barriers), in non-manufacturing activities (requiring lower initial investment in fixed assets), and in the areas from which more internationally oriented large firms relocated. Regional shifts in entrepreneurs' characteristics support our conjecture that new businesses entered due to necessity rather than opportunity. Finally, we show that firms relocating their headquarters maintained a distinct, market behavior and outperformed over the business cycle. Collectively, our findings reveal how institutional uncertainty and headquarters relocations reshape regional business landscapes and entrepreneurial dynamics.

"Market Power and Political Connections", with Yameng Fan (ENSAI-CREST)

Abstract: Do politics drive market power in the United States? This paper examines how corporate political connections affect firm-level markups through a quasi-exogenous shock: the involuntary removal of U.S. House of Representatives members (“committee exile”). We find that 10% more long-term political connections increased markups by 0.47 percentage point among U.S. public firms, while short-term connections exhibited no significant effects. We develop a general equilibrium model where firms build up political connections for regulatory burden avoidance. Counterfactual analysis suggests that the mass exiles at the end of 2010 accounted for 11.2% of the rise of markups post 2010.

"Climate Risk Engagements", with Francois Derrien (HEC Paris), Alexandre Garel (Audencia) and Arthur Romec (TBS)

Abstract: We study climate-risk–related engagements by one of the world’s largest institutional investors. Climate-risk engagements account for a substantial share of ESG engagements and are more common in high-emission industries. We find that firms with larger carbon footprints and greater exposure to transition risk are more likely to be targeted. Following engagement, targeted firms are more likely to commit to adopting science-based climate targets and to disclose climate-related information. They also experience a modest reduction in emissions intensity, though the magnitude is inconsistent with net-zero targets. We also find that climate-risk engagements are associated with greater shareholder support for management in voting outcomes. Overall, our results suggest that shareholder engagement on climate issues can be an important tool in the fight against climate change. However, in the wake of the ESG backlash, we observe a marked reduction in climate-risk engagements, concentrated mostly in firms where climate issues are not financially material.

"Defining Greenwashing", with Ariadna Dumitrescu (ESADE) and Javier Gil-Bazo (UPF & BSE)

Abstract: We define as a greenwasher a mutual fund that claims to pursue ESG goals, but whose claim is not supported by either portfolio holdings with above-average ESG ratings or by frequent voting support for ESG proposals (above the median support of all ESG funds). Using this definition, 29% of ESG funds in the US engaged in greenwashing during the 2016-2022 period. Greenwashers are more likely to underperform, tend to belong to larger and younger fund families, and are less frequently offered by signatories of the United Nations Principles for Responsible Investment. Investors, especially institutional investors, appear to discern true-ESG funds.