Business Groups and Employment

52 Pages Posted: 5 Jun 2015 Last revised: 16 Apr 2018

Mara Faccio

Purdue University - Krannert School of Management; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

William O'Brien

University of Illinois at Chicago

Date Written: April 5, 2018

Abstract

Using a newly assembled 50 country firm-level database spanning 19 years, we document that
business group affiliated firms display substantially less pronounced fluctuations in employment
than unaffiliated firms in response to macroeconomic shocks. The alleviation of financial
constraints by internal capital markets does not appear to be a sufficient explanation for these
results. The less pronounced fluctuations in employment in group affiliated firms following
systematic shocks points to a salient set of stakeholders, the employees, who appear to enjoy a
bright side of group affiliation. The results are robust to a variety of tests designed to mitigate
endogeneity concerns.

Keywords: Business Groups, Employment, Business Cycles

JEL Classification: G3, J6, K31, E32

Suggested Citation

Faccio, Mara and O'Brien, William, Business Groups and Employment (April 5, 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 539/2017. Available at SSRN: https://ssrn.com/abstract=2614250 or http://dx.doi.org/10.2139/ssrn.2614250

Mara Faccio (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

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

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

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

William O'Brien

University of Illinois at Chicago ( email )

601 S. Morgan St.
Chicago, IL 60607
United States

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