Do Managers Give Hometown Labor an Edge?
Year: 2017
Type: article
Abstract: Based on the psychological theory of place attachments, managers favor hometown workers over others. Consistent with this prediction, I find that following periods of industry distress, establishments located near CEOs’ childhood homes see fewer employment and pay reductions and are less likely to be divested relative to other establishments within firms. While there is no direct evidence that this employment bias destroys firm value, managers only implement these policies when governance is weak, suggesting that this favoritism is suboptimal. Together these results provide direct evidence of employee favoritism and show that the idiosyncratic styles of managers impact corporate employment decisions.
Source: Review of Financial Studies
DOI: 10.1093/rfs/hhx030
Author: Scott E. Yonker
Institution: Cornell University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3124753154