Employee treatment and its implications for bondholders

Tsung-Kang Chen, Yan Shing Chen, Hsiao Lin Yang

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

We examine the various channels through which the quality of a firm's employee relations can affect the welfare of bondholders. Our evidence suggests that better employee treatment benefits bondholders and leads to a lower bond spread by enhancing a firm's productivity, and by reducing the likelihood of product failures, labor strife, and employee turnover. However, a higher level of satisfaction is costlier for bondholders in firms facing more severe financial constraints or agency problems.

Original languageEnglish
Pages (from-to)1047-1079
Number of pages33
JournalEuropean Financial Management
Volume25
Issue number4
DOIs
StatePublished - 1 Sep 2019

Keywords

  • bond yield spreads
  • cost of debt
  • employee treatment

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