TY  - BOOK
AU  - Graham,John R.
AU  - Kim,Hyunseob
AU  - Li,Si
AU  - Qiu,Jiaping
ED  - National Bureau of Economic Research.
TI  - Employee Costs of Corporate Bankruptcy
T2  - NBER working paper series
PY  - 2019///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - June 2019; Hardcopy version available to institutional subscribers
N2  - An employee's annual earnings fall by 10% the year her firm files for bankruptcy and fall by a cumulative present value of 67% over seven years. This effect is more pronounced in thin labor markets and among small firms that are ultimately liquidated. Compensating wage differentials for this "bankruptcy risk" are approximately 2.3% of firm value for a firm whose credit rating falls from AA to BBB, about the same magnitude as debt tax benefits. Thus, wage premia for expected costs of bankruptcy are of sufficient magnitude to be an important consideration in corporate capital structure decisions
UR  - https://www.nber.org/papers/w25922
UR  - http://dx.doi.org/10.3386/w25922
ER  -