Information Dispersion across Employees and Stock Returns

Ashwini Agrawal, Isaac Hacamo, Zhongchen Hu and Wei Jiang

The Review of Financial Studies, 2021, vol. 34, issue 10, 4785-4831

Abstract: Rank-and-file employees are becoming increasingly critical for many firms, yet we know little about how their employment dynamics matter for stock prices. We analyze new data from the individual CV’s of public company employees and find that rank-and-file labor flows can be used to predict abnormal stock returns. Accounting data and survey evidence indicate that workers’ labor market decisions reflect information about future corporate earnings. Investors, however, do not appear to fully incorporate this information into their earnings expectations. The findings support the hypothesis that rank-and-file employees’ entry and exit decisions reveal valuable insights into their employers’ future stock performance.

JEL-codes: G00 G12 G14 G30 G40 J00 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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