*Fighting for Talent: Risk-Taking, Corporate Volatility and Organisation Change

30 Pages Posted: 8 Oct 2009

See all articles by Guido Friebel

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Date Written: 0000

Abstract

We show that access to finance may affect firms through the labour market. Talented workers want to realise their ideas but also seek insurance against income risk. Large firms default less often than small firms but they investigate more thoroughly and reject more good ideas. With easier access to consumer credit, talented workers become less averse to the income risk of working in small firms. Thus, small firms gain an advantage on the labour market, their profit volatility increases and large firms react by creating spin-offs. Existing and original empirical evidence is consistent with the implications of our theory.

Suggested Citation

Friebel, Guido and Giannetti, Mariassunta, *Fighting for Talent: Risk-Taking, Corporate Volatility and Organisation Change (0000). The Economic Journal, Vol. 119, Issue 540, pp. 1344-1373, October 2009. Available at SSRN: https://ssrn.com/abstract=1484251 or http://dx.doi.org/10.1111/j.1468-0297.2009.02289.x

Guido Friebel (Contact Author)

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Mariassunta Giannetti

Stockholm School of Economics ( email )

P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
Sweden
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)

HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

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