Information dispersion across employees and stock returns

Ashwini Agrawal, Isaac Hacamo and Zhongchen Hu

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 J00 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2021-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Review of Financial Studies, 1, October, 2021, 34(10), pp. 4785 – 4831. ISSN: 0893-9454

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:106491

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