Collateral Shocks and Corporate Employment*

Ersahin, Nuri; Irani, Rustom M.

doi:10.1093/rof/rfy036

Cited by 14 publications

(5 citation statements)

References 35 publications

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“…When we introduce REvalue_collateral in columns ( 6) and ( 8), the coefficients of REvalue_collateral are -0.003 and -0.006, respectively, but they are not statistically significant. This suggests that collateral loans are not utilized to incentivize employees, which differs from the findings of Ersahin et al (2018).…”

Section: Crowding-out Effect Of Real Estate On Non-real Estate Fixed ...mentioning

confidence: 72%

All That Glitters is Not Gold: Examining the Negative Impact of Real Estate Value on Companies' Market Competitiveness

Liang,

Tian,

Wei

et al. 2024

J Real Estate Finan Econ

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This paper introduces and investigates the hypothesis that the crowding-out effect surpasses the collateral effect, suggesting that an increase in the value of real estate holdings by companies hinders their competitiveness in the product market within emerging economies. Through our analysis, we elucidate the underlying mechanism, demonstrating that although Chinese listed companies benefit from their real estate holdings in terms of debt financing, these financial resources are predominantly reinvested in real estate projects rather than other productive endeavors. This effect is particularly pronounced when companies face significant financial constraints, operate in highly monopolistic industries, and are situated in regions where local governments heavily rely on land finance and face substantial pressure for GDP growth. By shedding light on the adverse implications of companies' real estate holdings and uncovering the factors contributing to the crowding-out effect, our research underscores the importance of enhanced regulations in the real estate markets of developing nations during the periods of irrational housing booms.

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Section: Crowding-out Effect Of Real Estate On Non-real Estate Fixed ...mentioning

confidence: 72%

All That Glitters is Not Gold: Examining the Negative Impact of Real Estate Value on Companies' Market Competitiveness

Liang,

Tian,

Wei

et al. 2024

J Real Estate Finan Econ

View full text Add to dashboard Cite

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“…Evidence at the industry level indicates that industries with more reliance on external credit suffer disproportionately during a period of financial crisis and are the slowest to subsequently recover (Abdul et al, 2011;Kroszner et al, 2007). Other studies (including Popov and Rocholl (2018), Giroud and Mueller (2017), Bentolila et al (2017), Berg (2018), Caggese et al (2018), Ersahin and Irani (2018), Benmelech et al (2019)) report evidence of contractions of the workforce in the face of credit crunches. Siemer (2019) estimates that, during the US 2007-2009 recession, financial constraints reduced employment growth by 4-8% in small firms when compared to large firms, and by 7-9% in young firms compared with their more established counterparts.…”

Section: Theoretical Discussionmentioning

confidence: 99%

International capital markets and domestic employment: Evidence from worldwide publicly listed large firms

Hou

Magnani

2021

World Economy

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We study how access to the international capital market affects domestic employment. Using a large firm‐level panel data set that covers over 60 countries between 1982 and 2014, we find that access to the international capital market positively affects firm‐level employment, and the magnitude of this impact is economically significant. This causal effect is identified through a generalised triple‐differences identification strategy that exploits variations in both external financial dependence and the progress of capital account openness. We also show that there are substantial heterogeneous effects across countries and firms; the effect is more pronounced for firms in industries that depend more on external finance and those in countries with weaker employment protection legislation. In addition, financially constrained firms respond more positively to international capital market access. Overall, our findings suggest that a strategy of gradually opening international capital markets will support employment.

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“…This positive information signaled by VAT credit refund could help firms obtain more cheaper external finance and eventually alleviate corporate liquidity constraints (Ohrn, 2019; Zwick & Mahon, 2017). Sufficient internal cash flow is viewed as a crucial determinant for firms' hiring decisions, in particular, when hiring highly skilled employees with higher hiring payments (Benmelech et al, 2021; Ersahin & Irani, 2020; Liu et al, 2021). Generally, employment costs incorporate inputs associated with recruiting, training, and hiring activities (Bloom, 2009), which need to be supported by adequate internal funds.…”

Section: Institutional Background and Hypothesis Developmentmentioning

confidence: 99%

“…Second, it contributes to research on the determinants of corporate hiring decisions by identifying how VAT credit refund affects firms' hiring decisions on highly skilled workers. Extant research has focused on various internal and external factors on firms' hiring decisions, such as external finance (e.g., Benmelech et al, 2019; Ersahin & Irani, 2020), tax enforcement (Liu et al, 2022), labor market uncertainty (Kuhnen & Oyer, 2016), institutional investors' horizons (Ghaly et al, 2020), environmental regulation (Liao et al, 2023), and CEO's characteristics (e.g., gender [Mo & Lee, 2022]). Although a few studies explore the effect of tax incentives on corporate employment (Freedman et al, 2023; Liu et al, 2022), it is still unclear how corporate hiring decisions respond to VAT credit refund policy.…”

Section: Introductionmentioning

confidence: 99%

Tax incentive and corporate hiring decisions: Evidence from China's VAT credit refund policy

Li,

Ge,

Zeng

2023

Manage Decis Econ

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Human capital acts as an increasingly crucial factor for firms to sustain stable performance and maintain competitiveness. However, we know little about how tax incentive affects corporate hiring decision concerning highly skilled employees. Using the policy of value‐added tax (VAT) credit refund in China as a quasi‐natural experiment, we explore whether and how VAT credit refund affects firms' hiring decisions on highly skilled employees. The Difference‐in‐Differences (DiD) estimate reveals that the VAT credit refund policy significantly increases the proportion of highly skilled employees. Further, the policy effect becomes more prominent in firms with heavier tax burdens, lower capital intensity, and higher financial constraints. Our mechanism tests reveal that credit refund alleviates liquidity constraints and improves capital‐skill complementarity, thus exerting a positive effect on corporate human capital upgrading. In addition, we find that the VAT credit refund policy improves earnings‐per‐worker and labor productivity but plays an insignificant role in labor income share. Our findings support the proposition that VAT credit refund leads to a positive effect on corporate human capital upgrading, offering new insights for policymakers to improve corporate employment skill structure and support the implementation of tax incentives to upgrade the labor force.

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Collateral Shocks and Corporate Employment*

Cited by 14 publications

References 35 publications

All That Glitters is Not Gold: Examining the Negative Impact of Real Estate Value on Companies' Market Competitiveness

All That Glitters is Not Gold: Examining the Negative Impact of Real Estate Value on Companies' Market Competitiveness

International capital markets and domestic employment: Evidence from worldwide publicly listed large firms

Tax incentive and corporate hiring decisions: Evidence from China's VAT credit refund policy

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