Journal:Journal of Financial & Quantitative Analysis 55 (7)
Abstract:In this article we examine whether and how changes in personal bankruptcy laws, viewed as a shock to employees’ expected personal wealth, affect corporate policies. Following a reform in personal bankruptcy laws that limits individuals’ access to bankruptcy protection, firms more affected by this regulation reform increase labor costs, reduce investment, and engage in less risk taking. The effects are stronger when employees have more bargaining power. Furthermore, firms in industries characterized by high unemployment risk reduce leverage. These results support the view that firms choose more
Co-author:Joseph T. Halford,Chu-Bin Lin
First Author:Yi-Wen Chen
Correspondence Author:Hung-Chia Scott Hsu
Discipline:Economics
First-Level Discipline:Applied Economics
Document Type:J
Volume:55
Issue:7
Page Number:2397 2428
Translation or Not:no
Date of Publication:2020-11-01
Included Journals:SSCI