Reputation Cycles and Earnings Dynamics
51 Pages Posted: 12 Nov 2018 Last revised: 30 Dec 2024
Date Written: November 2018
Abstract
Cyclical patterns in earnings can arise when contracts between firms and their workers are incomplete, and when workers cannot borrow or lend so as to smooth their consumption. Earnings cycles generate occasional large changes in earnings, consistent with some recent empirical findings. At the calibrated parameter values, financial constraints promote investment in reputation – an intangible capital form – in contrast to their documented inhibiting effect on investment in tangible capital.
Suggested Citation: Suggested Citation
Jovanovic, Boyan and Prat, Julien, Reputation Cycles and Earnings Dynamics (November 2018). NBER Working Paper No. w25252, Available at SSRN: https://ssrn.com/abstract=3282952
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