Managerial Sentiment and Employment

39 Pages Posted: 19 Mar 2021 Last revised: 8 Feb 2024

See all articles by Maurizio Montone

Maurizio Montone

Utrecht University

Yuhao Zhu

Erasmus University Rotterdam (EUR)

Remco C. J. Zwinkels

Vrije Universiteit Amsterdam - School of Business and Economics; Tinbergen Institute

Date Written: February 1, 2023


Recent research shows that managers, much like investors, are prone to sentiment. In this paper, we study the effect of managerial sentiment on firms' operations both theoretically and empirically. Consistent with our model's predictions, we find that high managerial sentiment increases employment growth, especially among firms with limited investment opportunities and regardless of their cash resources. We also show that high managerial sentiment offsets the negative effect of low investor sentiment and bad governance on employment, but ultimately leads to lower labor productivity. Overall, the findings unveil a new channel through which optimistic managers affect firms' operations.

Keywords: Managerial sentiment, Employment, Investment opportunities, Investor sentiment

JEL Classification: D80, G12, G14, G32

Suggested Citation

Montone, Maurizio and Zhu, Yuhao and Zwinkels, Remco C.J., Managerial Sentiment and Employment (February 1, 2023). Available at SSRN: or

Maurizio Montone

Utrecht University ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC

Yuhao Zhu

Erasmus University Rotterdam (EUR)

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA

Remco C.J. Zwinkels (Contact Author)

Vrije Universiteit Amsterdam - School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV

HOME PAGE: http://

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA


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