Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms

66 Pages Posted: 10 Jul 2012 Last revised: 3 Apr 2022

See all articles by Jennifer Brown

Jennifer Brown

University of Utah - Department of Finance

David A. Matsa

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Date Written: July 2012

Abstract

We use novel data from a leading online job search platform to examine the impact of corporate distress on firms’ ability to attract job applicants. Survey responses suggest that job seekers accurately perceive firms’ financial condition, as measured by companies’ credit default swap prices and accounting data. Analyzing responses to job postings by major financial firms during the Great Recession, we find that an increase in an employer’s distress results in fewer and lower quality applicants. These effects are particularly evident when the social safety net provides workers with weak protection against unemployment and for positions requiring a college education.

Suggested Citation

Brown, Jennifer and Matsa, David A., Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms (July 2012). NBER Working Paper No. w18208, Available at SSRN: https://ssrn.com/abstract=2103015

Jennifer Brown (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

David A. Matsa

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8337 (Phone)
847-491-5719 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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