| Abstract: | This article analyzes whether publicly traded firms price differentlyfrom privately held firms in the product markets. Our empiricalevidence shows that, in the U.S. newspaper industry, firms increasetheir prices when their ownership structure changes from privateto public. The effects are robust and significant. A plausibleexplanation is that private owners enjoy more freedom than publicmanagers to expand circulation and distort content, pursuingthe consumption of nonpecuniary benefits of control. Additionalevidence is consistent with this interpretation. Public newspapersshow lower prices when insiders' ownership participation ishigher. Moreover, private newspapers appear more likely thanpublic newspapers to endorse a candidate during presidentialcampaigns. To my knowledge there are no previous studies comparingpricing by private and public companies. |
