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Institutional Investors’ Horizons and Corporate Employment Decisions

Research output: Contribution to journalJournal article

Forthcoming

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Institutional Investors’ Horizons and Corporate Employment Decisions. / Ghaly, Mohamed; Anh Dang, Viet; Stathopoulos, Konstantinos .

In: Journal of Corporate Finance, 03.05.2020.

Research output: Contribution to journalJournal article

Harvard

Ghaly, M, Anh Dang, V & Stathopoulos, K 2020, 'Institutional Investors’ Horizons and Corporate Employment Decisions', Journal of Corporate Finance.

APA

Ghaly, M., Anh Dang, V., & Stathopoulos, K. (Accepted/In press). Institutional Investors’ Horizons and Corporate Employment Decisions. Journal of Corporate Finance.

Vancouver

Ghaly M, Anh Dang V, Stathopoulos K. Institutional Investors’ Horizons and Corporate Employment Decisions. Journal of Corporate Finance. 2020 May 3.

Author

Ghaly, Mohamed ; Anh Dang, Viet ; Stathopoulos, Konstantinos . / Institutional Investors’ Horizons and Corporate Employment Decisions. In: Journal of Corporate Finance. 2020.

Bibtex

@article{177e38458f35488d9545175221bbc9b1,
title = "Institutional Investors{\textquoteright} Horizons and Corporate Employment Decisions",
abstract = "Monitoring by long-term investors should reduce agency conflicts in firms{\textquoteright} labor investment choices. Consistent with this argument, we find that abnormal net hiring, measured as the absolute deviation from optimal net hiring predicted by economic fundamentals, decreases in the presence of institutional investors with longer investment horizons. Firms dominated by long-term shareholders reduce both over-investment (over-hiring and under-firing) and under-investment (under-hiring) in employees. The monitoring role of long-term investors is stronger for firms facing higher labor adjustment costs both in absolute terms and relative to capital adjustment costs, and those for which human capital is regarded as more important. The effect is also more pronounced for firms that have stronger incentives and/or more opportunities to deviate from expected net hiring. We address endogeneity concerns by exploiting exogenous changes to long-term institutional ownership resulting from annual reconstitutions of the Russell indexes.",
author = "Mohamed Ghaly and {Anh Dang}, Viet and Konstantinos Stathopoulos",
year = "2020",
month = may
day = "3",
language = "English",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Institutional Investors’ Horizons and Corporate Employment Decisions

AU - Ghaly, Mohamed

AU - Anh Dang, Viet

AU - Stathopoulos, Konstantinos

PY - 2020/5/3

Y1 - 2020/5/3

N2 - Monitoring by long-term investors should reduce agency conflicts in firms’ labor investment choices. Consistent with this argument, we find that abnormal net hiring, measured as the absolute deviation from optimal net hiring predicted by economic fundamentals, decreases in the presence of institutional investors with longer investment horizons. Firms dominated by long-term shareholders reduce both over-investment (over-hiring and under-firing) and under-investment (under-hiring) in employees. The monitoring role of long-term investors is stronger for firms facing higher labor adjustment costs both in absolute terms and relative to capital adjustment costs, and those for which human capital is regarded as more important. The effect is also more pronounced for firms that have stronger incentives and/or more opportunities to deviate from expected net hiring. We address endogeneity concerns by exploiting exogenous changes to long-term institutional ownership resulting from annual reconstitutions of the Russell indexes.

AB - Monitoring by long-term investors should reduce agency conflicts in firms’ labor investment choices. Consistent with this argument, we find that abnormal net hiring, measured as the absolute deviation from optimal net hiring predicted by economic fundamentals, decreases in the presence of institutional investors with longer investment horizons. Firms dominated by long-term shareholders reduce both over-investment (over-hiring and under-firing) and under-investment (under-hiring) in employees. The monitoring role of long-term investors is stronger for firms facing higher labor adjustment costs both in absolute terms and relative to capital adjustment costs, and those for which human capital is regarded as more important. The effect is also more pronounced for firms that have stronger incentives and/or more opportunities to deviate from expected net hiring. We address endogeneity concerns by exploiting exogenous changes to long-term institutional ownership resulting from annual reconstitutions of the Russell indexes.

M3 - Journal article

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

ER -