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Title: Financialization, corporate governance and employee pay: A firm level analysis
Authors: Carvalho, Margarita
Cerejeira, João
Keywords: Panel data models
Instrumental variables
Capital structure
Issue Date: 2019
Publisher: Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
Citation: Carvalho, M., & Cerejeira, J. (2019). Financialization, corporate governance and employee pay: A firm level analysis. NIPE Working Papers, 08/2019, 1-44, Universidade do Minho. Disponível no Repositório UPT,
Abstract: This study explores the link between financialization and employee wages. Using a panel of European banks from Bankscope we test whether banks use leverage strategically in order to refrain wage increases, focusing on the strategic use of banks’ capital structure as a disciplinary mechanism. The results indicate the existence of a negative and significant effect of leverage on average employee wages. In addition, considering that the effects of leverage could depend on individual bank risk, we extend our analysis to distressed banks, using the z-score as a measure to distinguish banks that are more prone to bankruptcy. We also observe that leverage is statistically significant when relating to average wages; however the impact does not differ in magnitude in comparison to non-distressed banks.
Appears in Collections:REMIT - Working Papers

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