Does skilled labor risk matter to suppliers? Evidence from trade credit

Abstract

Failure to attract and retain skilled labor exposes firms to skilled labor risk. This paper examines whether and how skilled labor risk affects trade credit offered by suppliers. The empirical analyses show that firms with greater exposure to skilled labor risk are associated with a reduction in trade credit granted by suppliers. It is consistent with the view that the risk arising from the departures of skilled employees is detrimental to firms. A change in employees who are well‐connected with the suppliers undermines firms’ bargaining power with their suppliers. Organization capital, managerial ability, and financial constraint are important moderators.

Vintage capital and trade credit

“…Second, our study contributes to the literature on trade credit. Prior studies explore the use of trade credit for firms with organisational capital (Khoo & Cheung, 2022), and tangible assets (Fabbri & Menichini, 2010; Petersen & Rajan, 1997). Yet, prior studies do not account for heterogeneity in the age of capital goods, and the extent to which age of capital goods influences trade credit offered by suppliers remains unexplored.…”

Discrimination announcements, employee opinion, and capital structure: Evidence from the EEOC

“…Research such asGrinblatt and Keloharju (2001);Hilary and Hui (2009);Chui et al (2010);Biggerstaff et al (2015);Davidson et al (2015);DeBacker et al (2015);Dougal et al (2015);Braguinsky and Mityakov (2015);Liang and Renneboog (2017);Pierce and Snyder (2017);and Parsons et al (2018) provide more evidence that culture impacts finance.6 See work byEdmans (2011);Guiso et al (2015a);Liu (2016); and Zhou and Makridis (2022) for more evidence. Other recent work even shows that employee treatment, defined in wide terms, have an influence on firm outcomes(Ge & Li, 2022;Khoo & Cheung, 2023;Dodd et al, 2024).7 Other work that examines opinion are Malmendier and Tate (2009); Edmans (2011); Guiso et al (2015b); Huang et al (2015); Cheng et al (2017); Au et al (2019); Liu et al (2022); Sheng (2019); Welch and Yoon (2020); and Barnes and Cheng (2023). 8 Other work that shows this is Maksimovic and Titman (1991); Berk et al (2010); Bae et al (2011); and Chemmanur et al (2013).…”