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Employee treatment and its implications for bondholders

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  • Tsung‐Kang Chen
  • Yan‐Shing Chen
  • Hsiao‐Lin Yang

Abstract

We examine the various channels through which the quality of a firm's employee relations can affect the welfare of bondholders. Our evidence suggests that better employee treatment benefits bondholders and leads to a lower bond spread by enhancing a firm's productivity, and by reducing the likelihood of product failures, labor strife, and employee turnover. However, a higher level of satisfaction is costlier for bondholders in firms facing more severe financial constraints or agency problems.

Suggested Citation

  • Tsung‐Kang Chen & Yan‐Shing Chen & Hsiao‐Lin Yang, 2019. "Employee treatment and its implications for bondholders," European Financial Management, European Financial Management Association, vol. 25(4), pages 1047-1079, September.
    • Handle: RePEc:bla:eufman:v:25:y:2019:i:4:p:1047-1079
    DOI: 10.1111/eufm.12196
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    Cited by:

    1. Koji Takahashi & Sumiko Takaoka, 2023. "How much do firms need to satisfy employees? - Evidence from credit spreads and online employee reviews," BIS Working Papers 1111, Bank for International Settlements.
    2. Seema Miglani & Victoria Obeng, 2023. "Gender Diversity and Human Capital Efficiency in Australian Institutions: The Moderating Role of Workforce Environment Quality," JRFM, MDPI, vol. 16(7), pages 1-26, July.
    3. Sun, Xuan Sean & Habib, Ahsan & Bhuiyan, Md. Borhan Uddin, 2020. "Workforce environment and audit fees: International evidence," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(1).

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