Levered Employees

64 Pages Posted: 21 Nov 2017 Last revised: 28 Sep 2019

See all articles by Roberto Pinto

Roberto Pinto

Lancaster University Management School

Date Written: September 11, 2019


This paper documents a novel empirical link between household and corporate debt markets. I find that in response to more generous personal bankruptcy exemptions, which lower employees’ financial risk, firms take on more debt. The leverage increases by 79 basis points in response to 1% rise in exemptions. This effect is stronger for firms in industries with higher labor turnover and more labor-intensive firms. Overall, results suggest that firms benefit from policies that decrease individuals' financial risk and thus contribute to the understanding of potential spillover effects from the household to the corporate debt market.

Keywords: bankruptcy, household and corporate debt, exemptions, employees

JEL Classification: G32, J21, K35

Suggested Citation

Pinto, Roberto, Levered Employees (September 11, 2019). Available at SSRN: https://ssrn.com/abstract=3070586 or http://dx.doi.org/10.2139/ssrn.3070586

Roberto Pinto (Contact Author)

Lancaster University Management School ( email )

Bailrigg, Lancaster
Lancaster, LA1 4YX
United Kingdom

HOME PAGE: http://https://sites.google.com/view/roberto-pinto/home

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