Employee treatment and its implications for bondholders

Tsung‐Kang Chen, Yan‐Shing Chen and Hsiao‐Lin Yang

European Financial Management, 2019, vol. 25, issue 4, 1047-1079

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.

Date: 2019
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