Corporate Flexibility in a Time of Crisis

John W. Barry, Murillo Campello, John Graham and Yueran Ma

No 29746, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use the COVID shock to study the direct and interactive effects of several forms of corporate flexibility on short- and long-term real business plans. We find that i) workplace flexibility, namely the ability for employees to work remotely, plays a central role in determining firms’ employment plans during the health crisis; ii) investment flexibility allows firms to increase or decrease capital spending based on their business prospects in the crisis, with effects shaped by workplace flexibility; and iii) financial flexibility contributes to stronger employment and investment, in particular when fixed costs are high. While the role of workplace flexibility is new to the COVID crisis, CFOs expect lasting effects for years to come: high workplace flexibility firms foresee continuation of remote work, stronger employment recovery, and shifting away from traditional capital investment, whereas low workplace flexibility firms rely more on automation to replace labor.

JEL-codes: G01 G17 G31 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn, nep-hea, nep-hrm and nep-lma
Note: CF EFG LS
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Citations: View citations in EconPapers (22)

Published as John W. Barry & Murillo Campello & John R. Graham & Yueran Ma, 2022. "Corporate flexibility in a time of crisis," Journal of Financial Economics, vol 144(3), pages 780-806.

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