Labor Reactions to Credit Deterioration: Evidence from LinkedIn Activity

80 Pages Posted: 10 Oct 2019 Last revised: 9 Nov 2021

See all articles by Jeff Gortmaker

Jeff Gortmaker

affiliation not provided to SSRN

Jessica Jeffers

University of Chicago - Booth School of Business

Michael Lee

Federal Reserve Banks - Federal Reserve Bank of New York

Date Written: November 8, 2021

Abstract

We examine worker reactions to firms' credit deterioration using weekly anonymized networking activity on LinkedIn. We show workers start initiating more connections immediately following a negative credit event, even at firms that are far from bankruptcy. This heightened networking activity is associated with contemporaneous and future departures, especially at highly-rated firms. Other negative events like missed earnings and equity sell recommendations do not trigger similar reactions. Overall, our results indicate that the latent build-up of connections triggered by credit deterioration represents a source of fragility for firms.

Keywords: Network formation, Credit ratings, Credit deterioration, Labor & finance

Suggested Citation

Gortmaker, Jeff and Jeffers, Jessica and Lee, Michael, Labor Reactions to Credit Deterioration: Evidence from LinkedIn Activity (November 8, 2021). Available at SSRN: https://ssrn.com/abstract=3456285 or http://dx.doi.org/10.2139/ssrn.3456285

Jeff Gortmaker

affiliation not provided to SSRN

Jessica Jeffers (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Michael Lee

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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