Eyub Yegen

PhD Student
6th Year, Finance

Dissertation

Title: Do Institutional Investors Mitigate Social Costs of Privatization? Evidence from Prisons

This paper examines whether institutional investors mitigate social costs that arise when government services are outsourced to private enterprises. Using hand-collected data on U.S. prisons, I find that privatization is associated with an increase in prisoner suicides by up to 39%. However, institutional investors of public companies managing private prisons decrease suicide rates by one third. These effects are stronger for long-term institutional investors since failing to internalize social externalities negatively impacts the long-term success of portfolio firms. Evidence from a tax reform that exogenously increases institutional ownership of prison management companies suggests that the relationship between ownership and social outcomes is causal. To explain these results, I show that institutional investors have incentives to be socially responsible due to litigation and reputation risks.

Projects

2020 Do Institutional Investors Mitigate Social Costs of Privatization? Evidence from Prisons
2020 Investing in Influence: Investors, Portfolio Firms, and Political Giving Collaborators: Marianne Bertrand (Chicago Booth), Matilde Bombardini (UC Berkeley Haas), Raymond Fisman (Boston), and Francesco Trebbi (UC Berkeley Haas)
2019 Common Ownership and Portfolio Rebalancing
2020 Strategic Corporate Social Responsibility Collaborators: Marianne Bertrand (Chicago Booth), Matilde Bombardini (UC Berkeley Haas), Raymond Fisman (Boston), and Francesco Trebbi (UC Berkeley Haas)
2020 Corporate Social Responsibility Measurement Collaborators: Matthew Shaffer (University of Southern California)
2020 What Determines Fund Flows? Collaborators: Susan Christoffersen (Rotman) and David Musto (Wharton)
2019 Cartels, Ownership, and Competition Collaborators: Niklas Duerr (Centre for European Economic Research)

Research Interests and Other Info

Institutional Investors; Corporate Social Responsibility; Welfare; Political Economy