TY - UNPB
T1 - Employee Inside Debt and Firm Risk-Taking: Evidence from Employee Deposit Programs in Japan
AU - Yamada, Takeshi
AU - Dasgupta, Sudipto
AU - Zhang, Zilong
AU - Lin, Yupeng
PY - 2014
Y1 - 2014
N2 - Using a sample of 2104 Japanese firms, we investigate the effect of employee deposits – a form of employee inside debt – on firms’ risk-taking behavior. Our identification strategy utilizes a new law in 2003 that changed the priority of employee deposits in bankruptcy and led to large scale withdrawals of employee deposits. Our results indicate that firms with higher levels of employee deposits have lower total risk, systematic risk, and idiosyncratic risk, engage in less risk-taking investment, and have higher leverage. Our findings suggest that the holding of the company’s debt by its employees can reduce the agency costs of debt.
AB - Using a sample of 2104 Japanese firms, we investigate the effect of employee deposits – a form of employee inside debt – on firms’ risk-taking behavior. Our identification strategy utilizes a new law in 2003 that changed the priority of employee deposits in bankruptcy and led to large scale withdrawals of employee deposits. Our results indicate that firms with higher levels of employee deposits have lower total risk, systematic risk, and idiosyncratic risk, engage in less risk-taking investment, and have higher leverage. Our findings suggest that the holding of the company’s debt by its employees can reduce the agency costs of debt.
UR - https://openalex.org/W192974145
M3 - Preprint
T3 - Social Science Research Network
BT - Employee Inside Debt and Firm Risk-Taking: Evidence from Employee Deposit Programs in Japan
ER -