We examine whether employee-friendly practices reduce firm risk. Using a large sample of U.S. firms, we find a significant inverse association between employee relations and firm risk. This negative effect remains intact when we use various measures of firm risk or different measures of employee relations. Although endogeneity cannot be ruled out fully, the results of a battery of tests suggest that it plays a limited role. When we examine employee relations strengths and concerns separately, we find that the risk-reducing effect comes mainly from enhancing employee relations strengths, not from decreasing employee relations concerns. This effect is most pronounced when improving employee involvement and in high-tech industries that are human capital intensive. Furthermore, we find that enhancing employee relations is associated with reduced reputational risk that decreases firm risk. Overall our results support the stakeholder theory of firm reputation.
JEL classification: G32, J3, M14
Keywords: Employee Satisfaction; Firm Risk; Stakeholder Theory; Firm reputation; Corporate Social Responsibility
학회소식
[2016년 제 3차] Employee-Friendly Practices and Firm Risk: A Test o
작성자 : 관리자
조회수 : 830
게시일 :
2016-08-24
