Employee treatment and its implications for bondholders. (23rd September 2018)

• Record Type: Journal Article
• Authors: Chen, Tsung‐Kang; Chen, Yan‐Shing; Yang, Hsiao‐Lin
• Is Part Of: European financial management. Volume 25:Number 4(2019:Sep.)
• Page Start: 1047
• Page End: 1079
• Publication Date: 2018-09-23
• Subjects: bond yield spreads -- cost of debt -- employee treatment; Finance -- European Union countries -- Periodicals; International finance -- Periodicals; Corporations -- European Union countries -- Finance -- Periodicals; 332.094
• DOI: 10.1111/eufm.12196
• Languages: English
• ISSNs: 1354-7798

Abstract

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.