Professor Giacinta Cestone

About

Overview

Giacinta Cestone obtained a PhD in Economics from the University of Toulouse (France). She has held research and teaching positions in various institutions such as the Institute for Economic Analysis (IAE, Barcelona), the University of Salerno (Italy) and Queen Mary, University of London. Her research interests are at the intersection between Corporate Finance, Labor Economics, and Industrial Organisation.

Her research investigates the interactions between corporate finance, labor and product markets. The paper “The Deep Pocket Effect of Internal Capital Markets” provides empirical evidence that affiliation with a cash-rich group represents a source of competitive strength for manufacturing firms. Her paper "Exploiting Growth Opportunities: The Role of Internal Labor Markets" highlights the role of the internal labor market (ILM) as a mechanism to respond to shocks. In ongoing work, she is studying how common trade credit arrangements between suppliers and retailers affect competition in the suppliers' product market.

Giacinta has an interest in the relationship between different firm stakeholders. In ongoing work, joint with Jiaying Li and Paolo Volpin, she is investigating how firms trade off the interests of shareholders and workers when their industry comes under antitrust scrutiny.

In the past, she has also contributed to the literature on venture capital financing; in ongoing work, she analyses how double-sided asymmetric information shapes venture capital syndication deals. In a earlier paper, she provides a model to determine the optimal allocation of cash flow and control rights in venture capital deals. She has also studied the relationship between corporate social responsibility and corporate governance.

Giacinta has published her articles in the Review of Economic Studies, the Review of Finance, the Journal of Financial Economics, the Journal of Finance, the Rand Journal of Economics, and the Journal of Economics and Management Strategy. She is a member of the Economic Advisory Group on Competition Policy (DG Competition, European Commission) and a research associate of the European Corporate Governance Institute (ECGI).

Qualifications

• PhD in Economics, University of Toulouse, France

Employment

• Lecturer in Economics, Queen Mary University of London, United Kingdom, September 2007 - March 2010
• Associate Professor of Economics, University of Salerno, Fisciano, Italy, January 2005 - August 2007
• Ramon y Cajal Fellow, Instituto de Análisis Económico (CSIC), Barcelona, Spain, September 2002 - December 2005
• Marie Curie Fellow, Instituto de Análisis Económico (CSIC), Barcelona, Spain, September 1999 - August 2002

Fellowships

• Ramon y Cajal Fellowship, Spain, Institute for Economic Analysis, Barcelona, January 2002 - March 2005
• Marie Curie Fellowship, Institute for Economic Analysis, Barcelona, January 2000 - December 2001
• Ente Einaudi Post-doctoral Fellowship, Ente Luigi Einaudi, Rome, May - July 1999

Memberships of professional organisations

• Member, Economic Advisory Group on Competition Policy (DG Competition, European Commission), January 2014 - present
• Research Associate, European Corporate Governance Institute (ECGI), September 2007 - present
• Member, Economic Advisory Group on Competition Policy (DG Competition, European Commission)

Awards

• French Social Investment Forum (2008). Finance and Substainability European Research
  Finance and Substainability European Research Award for the paper "Corporate Social Responsibility and Managerial Entrenchment"
• American Finance Association (2004). Brattle Prize
  Nomination for the 2004 Brattle Prize for the paper "Anticompetitive Financial Contracting"
• The European Association for Research in Industrial Economics (EARIE) (2000). EARIE Young Economists' Essay Competition
  First Prize EARIE Young Economists' Essay Competition for the paper "The Strategic Impact of Resource Flexibility in Business Groups"

Languages

French, Italian and Spanish; Castilian

Expertise

Primary topics

• Corporate Finance
• Corporate Governance
• Industrial Organization
• Venture Capital

Research

Part of my recent research investigates the role of corporate groups and conglomerates in the real economy, the functioning of internal capital markets and of internal labour markets. My paper "The Deep-Pocket Effect of Internal Capital Markets" (Journal of Financial Economics 2013) shows that the ability to rely on groups’ internal capital markets provides a competitive edge to group-affiliated firms. We provide empirical evidence that entry in manufacturing industries is negatively related to the cash reserves hoarded by incumbent business groups, and positively related to the entrant groups' cash; the ability to rely on group cash also seems to reduce exit of recent entrants. These effects are more important in environments where financial constraints are pronounced. An ongoing project (joint with Francis Kramarz, Chiara Fumagalli and Giovanni Pica) investigates the interplay between internal capital markets and internal labour markets in corporate groups. The project relies on access to INSEE data that allow us to track how French corporate groups reallocate employees across different units, and has been awarded an Axa Research Fund Grant and a Leverhulme Trust Research Project Grant. In the past three years I have also contributed to the literature on venture capital financing.

Research topics

Research students

2^ndsupervisor

• Xiaoke Ye, Research Student

Publications

1. Cestone, G., Fumagalli, C., Kramaz, F. and Pica, G. (2020). Insurance Between Firms: The Role of Internal Labor Markets. Naples, Italy: Centre for Studies in Economics and Finance CSEF.
2. Cestone, G. (2014). Venture Capital Meets Contract Theory: Risky Claims or Formal Control? Review of Finance, 18(3), pp. 1097-1137. doi:10.1093/rof/rft021

   [publisher’s website]

3. Boutin, X., Cestone, G., Fumagalli, C., Pica, G. and Serrano-Velarde, N. (2013). The deep-pocket effect of internal capital markets. JOURNAL OF FINANCIAL ECONOMICS, 109(1), pp. 122-145. doi:10.1016/j.jfineco.2013.02.003

   [publisher’s website]

4. Boutin, X., Cestone, G., Fumagalli, C., Pica, G. and Serrano-Velarde, N. (2009). The Deep-Pocket Effect of Internal Capital Markets.
5. Cespa, G. and Cestone, G. (2007). Corporate social responsibility and managerial entrenchment. Journal of Economics and Management Strategy, 16(3), pp. 741-771. doi:10.1111/j.1530-9134.2007.00156.x

   [publisher’s website]

6. Cestone, G. and Fumagalli, C. (2005). The strategic impact of resource flexibility in business groups. RAND Journal of Economics, 36(1), pp. 193-214
7. Cestone, G. and White, L. (2003). Anticompetitive Financial Contracting: The Design of Financial Claims. Journal of Finance, 58(5), pp. 2109-2142. doi:10.1111/1540-6261.00599

   [publisher’s website]

Education

Course Directorship

- 2010 - 2013, MSc International Accounting and Finance, Director

Professional activities