Abstract

The research in this proposal investigates how firms’ financial and operational decisions affect the value and riskiness of employees’ human capital. This question is at the intersection of two disciplines: research in corporate finance investigates how corporate events such as mergers, acquisitions, and bankruptcies affect firm value and profitability. This literature analyzes corporate governance arrangements and corporate transactions mainly at the firm level, and with respect to their influence on shareholder value, whereas the influence on other stakeholders, notably employees, receives little attention. By contrast, research in labor economics analyzes how economic shocks, e.g., from technological change, international trade, or business cycle fluctuations affect individual employees. However, the labor literature rarely pays attention to firm-level arrangements and policies. We see corporate transactions as important transmission mechanisms between these macro-level shocks and the outcomes for individual employees.