Managerial Sentiment and Employment

32 Pages Posted: 19 Mar 2021

See all articles by Maurizio Montone

Maurizio Montone

Utrecht University

Yuhao Zhu

Erasmus University Rotterdam (EUR)

Remco C. J. Zwinkels

VU University Amsterdam - Department of Finance and Financial Sector Management

Date Written: February 1, 2021


We study firms' hiring decisions in a world in which both managers and investors are prone to expectation errors. We show that high managerial sentiment increases employment growth, especially at firms with worse investment opportunities and low-quality corporate governance, and during times of low investor sentiment. Using data on U.S. publicly traded companies and CEO option holdings, we find evidence consistent with these predictions. The results unveil a new channel through which managerial sentiment affects firms' operations, and suggest that managerial optimism can counter the negative effect of pessimistic investors on labor markets.

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, 2021). 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)

VU University Amsterdam - Department of Finance and Financial Sector Management ( email )

De Boelelaan 1105
Amsterdam, NL-1081HV
+31 20 59 85220 (Phone)


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