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Do Publicly Traded Firms Price Differently from Private Firms?

Do Publicly Traded Firms Price Differently from Private Firms? This article analyzes whether publicly traded firms price differently from privately held firms in the product markets. Our empirical evidence shows that, in the U.S. newspaper industry, firms increase their prices when their ownership structure changes from private to public. The effects are robust and significant. A plausible explanation is that private owners enjoy more freedom than public managers to expand circulation and distort content, pursuing the consumption of nonpecuniary benefits of control. Additional evidence is consistent with this interpretation. Public newspapers show lower prices when insiders' ownership participation is higher. Moreover, private newspapers appear more likely than public newspapers to endorse a candidate during presidential campaigns. To my knowledge there are no previous studies comparing pricing by private and public companies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Law and Economics Review Oxford University Press

Do Publicly Traded Firms Price Differently from Private Firms?

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References (15)

Publisher
Oxford University Press
Copyright
Copyright Oxford University Press 2003
ISSN
1465-7252
eISSN
1465-7260
DOI
10.1093/aler/5.1.32
Publisher site
See Article on Publisher Site

Abstract

This article analyzes whether publicly traded firms price differently from privately held firms in the product markets. Our empirical evidence shows that, in the U.S. newspaper industry, firms increase their prices when their ownership structure changes from private to public. The effects are robust and significant. A plausible explanation is that private owners enjoy more freedom than public managers to expand circulation and distort content, pursuing the consumption of nonpecuniary benefits of control. Additional evidence is consistent with this interpretation. Public newspapers show lower prices when insiders' ownership participation is higher. Moreover, private newspapers appear more likely than public newspapers to endorse a candidate during presidential campaigns. To my knowledge there are no previous studies comparing pricing by private and public companies.

Journal

American Law and Economics ReviewOxford University Press

Published: Mar 1, 2003

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