Levered Employees

46 Pages Posted: 21 Nov 2017 Last revised: 29 Jan 2020

See all articles by Roberto Pinto

Roberto Pinto

Lancaster University Management School

Date Written: January 28, 2020

Abstract

Using state-level generosity of US consumer bankruptcy laws, this paper documents corporate implications of gains in workforce financial well-being. First, I show that more generous consumer bankruptcy laws reduce absences due to illness and increase labor productivity and firm profitability. Second, I find that firms issue more debt in response to these policies protecting individuals' wealth in personal bankruptcy. This effect is stronger for firms in industries with higher labor turnover and mobility and more labor-intensive firms. Overall, my findings suggest that consumer bankruptcy laws targeting individuals have important spillover effects on corporate performance and borrowing capacity.

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

JEL Classification: G32, J21, K35

Suggested Citation

Pinto, Roberto, Levered Employees (January 28, 2020). 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://sites.google.com/view/roberto-pinto/home

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