Severance Pay and Corporate Finance: Empirical Evidence from a Panel of Austrian and Italian Firms

Mirko Cardinale () and Mike Orszag ()
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Mirko Cardinale: Watson Wyatt LLP
Mike Orszag: Towers Watson

No 1383, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the empirical link between severance pay and corporate finance. Severance pay is an economic debt of the employer and hence should be taken into account by the market in its assessments of risk. Using a hand collected dataset of accounting data from Italy and Austria we find there is only a limited relationship between severance pay and market risk indicators. This suggests that arguments that severance pay systems destroy corporate value may need to be reassessed.

Keywords: Italian employee benefits; severance pay; corporate finance; Austrian employee benefits (search for similar items in EconPapers)
JEL-codes: G39 J32 J65 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2004-11
New Economics Papers: this item is included in nep-acc and nep-eec
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Published - published in: Empirica, 2005, 32 (3-4), 309-343

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