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Employee Relations and Credit Risk

43 Pages Posted: 7 Oct 2009  

Rob Bauer

Maastricht University

Jeroen Derwall

Maastricht University - European Centre for Corporate Engagement; Tilburg University - School of Economics; Maastricht University - Department of Finance

Daniel Hann

Deutsche Asset & Wealth Management; European Centre for Corporate Engagement; Maastricht University

Date Written: October 3, 2009

Abstract

Consistent with the theory that human capital management influences organizational performance and risk, we find that employee relations explain the cross-sectional variation in credit risk. We construct an aggregate measure for the quality of employee relations based on the firm’s engagement in employment practices and policies, and document that firms with stronger employee relations enjoy a statistically and economically lower cost of debt financing, higher credit ratings, and lower firm-specific risk. These findings are robust to the inclusion of a comprehensive set of controls and to alternative explanations.

Keywords: nonfinancial stakeholders, employee relations, cost of debt, credit ratings, idiosyncratic risk

JEL Classification: M54, M12, G33, G32

Suggested Citation

Bauer, Rob and Derwall, Jeroen and Hann, Daniel, Employee Relations and Credit Risk (October 3, 2009). Available at SSRN: https://ssrn.com/abstract=1483112 or http://dx.doi.org/10.2139/ssrn.1483112

Rob Bauer

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 3883871 (Phone)

Jeroen Derwall

Maastricht University - European Centre for Corporate Engagement ( email )

FEBA
Tongersestraat 53
Maastricht, Limburg 6200MD
Netherlands

HOME PAGE: http://www.corporate-engagement.com/

Tilburg University - School of Economics ( email )

P.O. Box 90153
NL-5000 LE Tilburg, Brabant
Netherlands

HOME PAGE: http://www.tilburguniversity.nl/webwijs/show/?uid=j.m.m.derwall

Maastricht University - Department of Finance ( email )

Maastricht, 6200 MD
Netherlands

HOME PAGE: http://www.fdewb.unimaas.nl/finance/?page=member&id=175

Daniel Hann (Contact Author)

Deutsche Asset & Wealth Management ( email )

Mainzer Landstrasse 11-17
Frankfurt, Hesse 60329
Germany
+49-69-910-13398 (Phone)

HOME PAGE: http://https://www.deutsche-bank.de/de/content/company/Asset-and-Wealth-Management.htm

European Centre for Corporate Engagement ( email )

School of Business and Economics
Tongersestraat 53
Maastricht, Limburg 6211LM
Netherlands

HOME PAGE: http://www.corporate-engagement.com/

Maastricht University ( email )

Tongersestraat 53
Maastricht, 6211 LM
Netherlands
+31433884822 (Phone)
+31433884875 (Fax)

HOME PAGE: http://www.fdewb.unimaas.nl/finance/?page=member&id=201

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