Topic: Firms’ Internal Networks and Local Economic Shocks

Speaker: Xavier Giroud, Associate Professor of Finance, Columbia Business School

Date: May 30 (Wednesday)

Time: 10:00-11:30am

Location: Building 4, Room 101

Language: English

Abstract:

This paper shows that local economic shocks spill over to distant regions through firms’ internal networks, and that such spillovers matter economically by affecting aggregate employment in those regions. Using confidential micro data from the U.S. Census Bureau, we find that establishment-level employment responds strongly to shocks in other regions in which the firm is operating. Consistent with theory, the elasticity of establishment-level employment with respect to shocks in other regions increases with firms’ financial constraints. Also, establishments belonging to firm networks exhibit smaller employment elasticities with respect to (their own) local shocks. To account for the impacts of general equilibrium adjustments, we examine aggregate employment at the county level. Similar to what we found at the establishment level, we obtain large elasticities of county-level employment with respect to shocks in other counties linked through firms’ internal networks.

About the speaker:

Xavier Giroud is the Roger F. Murray Associate Professor of Finance at Columbia Business School. He is also a Faculty Research Fellow at the National Bureau of Economic Research (NBER) and a Research Affiliate at the Centre for Economic Policy Research (CEPR).

Giroud's research interests are in the area of corporate finance and corporate governance. In particular, his work examines how companies allocate (and misallocate) resources across company units, the interplay between finance and labor, corporate taxation, corporate governance, and venture capital. His research has appeared in leading academic journals, including the Quarterly Journal of Economics, Journal of Finance, Journal of Financial Economics, and Review of Financial Studies. He has received various research awards, including the Herman E. Krooss Award for the best doctoral dissertation across all disciplines at the Stern School of Business, New York University. Before joining Columbia, Giroud was the Ford International Career Development Professor of Finance and an Associate Professor of Finance at the MIT Sloan School of Management.

Giroud holds an MA in quantitative economics and finance from the University of St. Gallen as well as an MPhil in finance and a PhD in finance from the Stern School of Business, New York University.