Business Groups and Employment

53 Pages Posted: 5 Jun 2015 Last revised: 27 Feb 2020

See all articles by Mara Faccio

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: January 31, 2020

Abstract

Using a newly assembled 50 country firm-level database spanning 19 years, we document a “bright side” for employees of business group affiliated firms: less pronounced fluctuations in employment than unaffiliated firms in response to macroeconomic shocks. The results are robust to a variety of tests designed to mitigate endogeneity concerns, including propensity score matching and comparisons of successful and failed group integrations, and are present in both booms and recessions. Our results are most consistent with group internal labor markets rather than several alternative explanations (internal capital markets, a lower overall sensitivity to shocks in group firms, or agency problems).

Keywords: Business Groups, Employment, Business Cycles

JEL Classification: G3, J6, K31, E32

Suggested Citation

Faccio, Mara and O'Brien, William, Business Groups and Employment (January 31, 2020). 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
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European Corporate Governance Institute (ECGI)

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Belgium

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

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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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