What Drives Firms’ Hiring Decisions? An Asset Pricing Perspective
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 3825–3860 |
| Number of pages | 36 |
| Journal / Publication | Review of Financial Studies |
| Volume | 36 |
| Issue number | 8 |
| Online published | 9 Feb 2023 |
| Publication status | Published - Sept 2023 |
Link(s)
Abstract
We document that the aggregate hiring rate of publicly traded firms in the U.S. economy negatively predicts stock market returns and long-term cash flows, and positively predicts short-term cash flows. In addition, through a variance decomposition, we show that the time-series variation in the aggregate hiring rate is mainly driven by changes in discount rates and short-term expected cash flows, with no contribution from variation in long-term expected cash flows. We estimate a neoclassical dynamic model with labor market frictions and show that labor adjustment costs and time-varying risk are essential for the model to replicate the empirical patterns. © 2023 The Author(s).
Research Area(s)
Bibliographic Note
Research Unit(s) information for this publication is provided by the author(s) concerned.
Citation Format(s)
What Drives Firms’ Hiring Decisions? An Asset Pricing Perspective. / Belo, Frederico; Donangelo, Andres; Lin, Xiaoji et al.
In: Review of Financial Studies, Vol. 36, No. 8, 09.2023, p. 3825–3860.
In: Review of Financial Studies, Vol. 36, No. 8, 09.2023, p. 3825–3860.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
