The Impact of the Opioid Crisis on Firm Value and Investment

97 Pages Posted: 11 Mar 2019 Last revised: 17 Oct 2023

See all articles by Paige Ouimet

Paige Ouimet

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Elena Simintzi

Centre for Economic Policy Research (CEPR); University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Kailei Ye

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Multiple version iconThere are 2 versions of this paper

Date Written: October 16, 2023

Abstract

We show a negative effect of opioid prescriptions on subsequent individual employment among employers in our sample, using doctor opioid prescribing propensity as our instrument. This has implications for firms who must now contend with lower local labor supply. We find a negative relationship between opioid prescriptions and subsequent establishment growth. However, firms respond to the labor shortage by investing more in technology, replacing the relatively scarcer labor with capital, especially when they are not financially constrained. We find positive abnormal returns upon the passage of state laws intended to limit opioid prescriptions - driven by firms more reliant on labor.

Keywords: opioid, firm value, labor supply

Suggested Citation

Ouimet, Paige and Simintzi, Elena and Ye, Kailei, The Impact of the Opioid Crisis on Firm Value and Investment (October 16, 2023). Available at SSRN: https://ssrn.com/abstract=3338083 or http://dx.doi.org/10.2139/ssrn.3338083

Paige Ouimet (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Elena Simintzi

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Kailei Ye

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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