Corporate Governance and the Firm's Workforce
45 Pages Posted: 17 Apr 2016
Date Written: April 15, 2016
This paper uses matched employer-employee data to study the effects of corporate governance on the earnings and composition of the firm's workforce. Stronger corporate governance is measured using the passage of shareholder-sponsored proposals to declassify the board of directors. Following vote passage, employee earnings decrease by 12% on average, directionally consistent with previous research. However, this is driven by the changing composition of the workforce and there is no significant change in individual employee wages. This evidence suggests that stronger corporate governance leads to real changes in the types of employees selected and retained by the firm.
JEL Classification: G34, G30, J30
Suggested Citation: Suggested Citation