Eyub Yegen
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Dissertation
Title: Do Institutional Investors Mitigate Social Costs of Privatization? Evidence from Prisons
This paper examines whether institutional investors mitigate the social trade-off that arises when government services are outsourced to private enterprises. Using hand-collected data on U.S. prisons, I find that a 1% increase in institutional ownership of public companies that manage prisons (PMCs) reduces prisoner suicides by up to 1.2%. These effects are stronger for institutional investors sensitive to long-term firm value since they are more attentive to social outcomes and improve prison conditions. Using a novel tax reform that exogenously changed institutional ownership of PMCs, I show that there is a causal effect of ownership on social outcomes. Lastly, I find that institutional investors have an incentive to be socially responsible due to litigation and reputation risks.
Research Interests and Other Info
Institutional Investors; Corporate Social Responsibility; Welfare; Political Economy
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