Bai, John (Jianqiu)
[Verfasser:in]
;
Fairhurst, Douglas J.
[Sonstige Person, Familie und Körperschaft];
Serfling, Matthew
[Sonstige Person, Familie und Körperschaft]
Employment Protection, Investment, and Firm Growth
Anmerkungen:
In: Review of Financial Studies, Forthcoming
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 1, 2018 erstellt
Beschreibung:
We exploit the adoption of U.S. state-level labor protection laws to study the effect of employment protection on corporate investment and growth. We find that, following the adoption of these laws, capital expenditures decrease, resulting in firms growing sales at a slower rate. Our findings are consistent with theories predicting that greater employment protection discourages investment by making projects more irreversible. Supporting this theoretical channel, following negative cash flow shocks, firms are less likely to downsize operations in states that have adopted these laws but more likely to downsize operations in states that have not adopted these laws