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The Effect of Traffic Congestion on Labour Investment Efficiency

Year: 2026

Type: article

Abstract: ABSTRACT The study examines the effects of headquarters‐city traffic congestion on labour investment efficiency. The results indicate that firms headquartered in congested cities may engage in inefficient labour investment decisions. Further analysis indicates that the inefficiency is associated with both overinvestment and underinvestment in labour. The results suggest that the effect of traffic congestion on net hiring may be induced by managerial preference for empire building. The results remain robust to endogeneity concerns. In sum, the study underscores traffic congestion as a novel external determinant of corporate investment policy.

Source: European Financial Management

DOI: 10.1111/eufm.70076

Author: Rajib Chowdhury

Institution: Pennsylvania State University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Sustainable cities and communities, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,350