The Market's Reaction to Changes at the Employee Level: Evidence from the Boston Celtics

Abstract

Using data on the National Basketball Association’s (NBA) Boston Celtics, which traded on the New York Stock Exchange from 1986 to 1998, I investigate the effect of changes in labor on stock prices. Several findings emerge. The market positively values a top-level education when hiring inexperienced employees. The market punishes firms that dismiss employees with many years of professional experience. The results of this study are generalizable to traditional firms.

Keywords: Labor and Finance, Corporate Governance

JEL Classification: G30, G34, J24, J42