Business Groups and Employment

Mara Faccio () and William J. O’Brien ()
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Mara Faccio: Krannert School of Management, Purdue University, West Lafayette, Indiana 47907; Asian Bureau of Finance and Economics Research, National University of Singapore Business School, Singapore 117592; European Corporate Governance Institute, Royal Academies of Belgium, Palace of the Academies, 1000 Brussels, Belgium; National Bureau of Economic Research, Cambridge, Massachusetts 02138
William J. O’Brien: School of Business Administration, The University of Illinois at Chicago, Chicago, Illinois 60612

Management Science, 2021, vol. 67, issue 6, 3468-3491

Abstract: Using a newly assembled 50-country firm-level database spanning 19 years, we document a bright side for employees of business group–affiliated firms: less pronounced fluctuations in employment than unaffiliated firms in response to macroeconomic shocks. The results are robust to a variety of tests designed to mitigate endogeneity concerns, including propensity score matching and comparisons of successful and failed group integrations, and are present in both booms and recessions. Our results are most consistent with group internal labor markets rather than several alternative explanations (internal capital markets, a lower overall sensitivity to shocks in group firms, or agency problems).

Keywords: business groups; employment; business cycles (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:6:p:3468-3491

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