The cross‐sectional return predictability of employment growth: A liquidity risk explanation

Abstract

Employment growth (EG) is related to liquidity fundamentals of investment opportunities, firm health, and information environment and quality. This, in turn, implies that liquidity risk may play a role in explaining the relation between EG and stock returns. We find strong empirical evidence supporting the link between EG and liquidity risk. Stocks of high‐EG firms are more liquid and exposed to lower liquidity risk than stocks of low‐EG firms. After adjusting for liquidity risk, EG loses its power to predict returns.

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

“…It is crucial because these employees possess critical knowledge of the firm's operations and are particularly important for the achievement of the firm's production and innovation. Recent studies highlight the importance of skilled labor in influencing post‐merger performance (Wan et al., 2021), venture capital investments (Gu et al., 2020), corporate debt maturity (Liu et al., 2021), firm performance (Samagaio & Rodrigues, 2016), liquidity risk (Liu et al., 2022), and abnormal stock returns (Eiling, 2013). The loss of certain employees or the inability to attract and retain qualified individuals is likely to have a material adverse effect on firms’ business, financial condition, and operations, particularly if key individuals are subsequently recruited by a competitor.…”