Employee well-being, firm leverage, and bankruptcy risk
Loading...
Download
Associated Records
Authors
File Licence
Editors
Date
2010-05-01
Source Title
Journal of Banking & Finance
Journal Title
Journal ISSN
Volume Title
Publisher
ELSEVIER
Melbourne Authors
Affiliation
Finance
Document Type
Journal Article
Subject Code
Citation
Verwijmeren, P. & Derwall, J. (2010). Employee well-being, firm leverage, and bankruptcy risk. Journal of Banking and Finance, 34 (5), pp.956-964. https://doi.org/10.1016/j.jbankfin.2009.10.006.
Access Status
This item is currently not available from this repository
Access URL
Open Access URL
Open Access at PMC
Linked Resource URL
NHMRC Grant Code
ARC Grant Code
Description
Abstract
Employees of liquidating firms are likely to lose income and non-pecuniary benefits of working for the firm, which makes bankruptcy costly for employees. This paper examines whether firms take these costs into account when deciding on the optimal amount of leverage. We find that firms with leading track records in employee well-being significantly reduce the probability of bankruptcy by operating with lower debt ratios. Moreover, we observe that firms with better employee track records have better credit ratings, even when we control for differences in firm leverage.
Notes
Terms of Use
Keywords
Banking, Finance and Investment