Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms

Jennifer Brown, David A. Matsa

Research output: Contribution to journalArticlepeer-review

34 Scopus citations

Abstract

We use novel data from a leading online job search platform to examine the impact of corporate distress on firms' ability to attract job applicants. Survey responses suggest that job seekers accurately perceive firms' financial condition, as measured by companies' credit default swap prices and accounting data. Analyzing responses to job postings by major financial firms during the Great Recession, we find that an increase in an employer's distress results in fewer and lower quality applicants. These effects are particularly evident when the social safety net provides workers with weak protection against unemployment and for positions requiring a college education.

Original languageEnglish (US)
Pages (from-to)507-550
Number of pages44
JournalJournal of Finance
Volume71
Issue number2
DOIs
StatePublished - Apr 1 2016

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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