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• Article | American Economic Journal: Economic Policy | August 2012

  Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance

  Laura Alfaro and Maggie Chen

  We examine the differential response of establishments to the recent global financial crisis with particular emphasis on the role of foreign ownership. Using a worldwide establishment panel dataset, we investigate how multinational subsidiaries around the world responded to the crisis relative to local establishments. We find that first, multinational subsidiaries fared on average better than local counterfactuals with similar economic characteristics. Second, among multinational subsidiaries, establishments sharing stronger vertical production and financial linkages with parents exhibited greater resilience. Finally, in contrast to the crisis period, the effect of foreign ownership and linkages on establishment performance was insignificant in non-crisis years.

  Keywords: Globalization; Financial Crisis; Multinational Firms and Management; Data and Data Sets; Business Subsidiaries; Production; Finance; Performance; Ownership;

  Citation:

  Alfaro, Laura, and Maggie Chen. "Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance." American Economic Journal: Economic Policy 4, no. 3 (August 2012): 30–55. (Also NBER Working Paper No. 17141.)

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• Case | HBS Case Collection | 2012

  Gerry Pasciucco at AIG Financial Products (A)

  Gautam Mukunda and Thomas J. DeLong

  Gerry Pasciucco was appointed to lead American International Group's Financial Products (AIGFP) group after the government bailout of AIG in 2008 and charged with the task of shutting down the division while minimizing the government's losses. AIGFP's failed trades had threatened to bring down the entire company, and the government had responded by loaning AIG $182 billion in exchange for 79.9% of the company, because it feared that AIG's failure could trigger the collapse of the entire global financial system. Several months into his tenure, the division paid large retention bonuses to all of its professionals according to a contract negotiated before he joined AIGFP. These bonuses were seen by the public as going to the very people whose mistakes resulted in the need for a bailout in the first place and resulted in an unprecedented storm of public outrage, culminating in a Congressional hearing in which AIG's CEO, Ed Liddy, was repeatedly attacked for making the bonus payments. Liddy responded by asking people who had received the largest payments to return the money to the company. Now Pasciucco has to decide how to lead his team through this crisis while grappling with the larger issues of the justice of the retention payments.

  Keywords: Corporate Accountability; Ethics; Crisis Management; Financial Crisis; Management Teams; Business and Government Relations; Financial Services Industry; United States;

  Citation:

  Mukunda, Gautam, and Thomas J. DeLong. "Gerry Pasciucco at AIG Financial Products (A)." Harvard Business School Case 413-059, November 2012.

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• Case | HBS Case Collection | 2012

  Prelude & Co.

  Thomas DeLong, Michael Calabrese and Joseph Siesholtz

  Citation:

  DeLong, Thomas, Michael Calabrese, and Joseph Siesholtz. "Prelude & Co." Harvard Business School Case 412-080, March 2012.

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