Labor Reactions to Credit Deterioration: Evidence from LinkedIn Activity

36 Pages Posted: 10 Oct 2019 Last revised: 17 Jan 2020

See all articles by Jeff Gortmaker

Jeff Gortmaker

affiliation not provided to SSRN

Jessica Jeffers

University of Chicago - Booth School of Business

Michael Junho Lee

Federal Reserve Banks - Federal Reserve Bank of New York

Date Written: January 15, 2020

Abstract

We examine workers' reactions to signals of their firms' credit deterioration using anonymized networking activity on LinkedIn. We show significant increases in weekly connection formation following the announcement of a negative credit watch. More senior and more skilled workers have the strongest reactions, and increased connection activity appears for both workers who leave and workers who stay at the firm. Positive credit news and non-credit economic news like missed earnings do not trigger similar changes in networking activity. Our results appear consistent with a precautionary motive for networking.

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

Suggested Citation

Gortmaker, Jeff and Jeffers, Jessica and Lee, Michael Junho, Labor Reactions to Credit Deterioration: Evidence from LinkedIn Activity (January 15, 2020). 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 Junho Lee

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

33 Liberty Street
New York, NY 10045
United States

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