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Severance Pay and Corporate Finance: Empirical Evidence from a Panel of Austrian and Italian Firms

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Author Info
Cardinale, Mirko (Watson Wyatt LLP)
Orszag, Mike () (Watson Wyatt LLP and IZA Bonn)
Abstract

This paper examines the empirical link between severance pay and corporate finance. Severance pay is an economic debt of the employer and hence should be taken into account by the market in its assessments of risk. Using a hand collected dataset of accounting data from Italy and Austria we find there is only a limited relationship between severance pay and market risk indicators. This suggests that arguments that severance pay systems destroy corporate value may need to be reassessed.

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File URL: ftp://repec.iza.org/RePEc/Discussionpaper/dp1383.pdf
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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1383.

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Length: 34 pages
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1383

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Related research
Keywords: severance pay; corporate finance; Austrian employee benefits; Italian employee benefits;

Find related papers by JEL classification:
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Private Pensions
G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Martin Feldstein & Stephanie Seligman, 1981. "Pension Funding, Share Prices, and National Saving," NBER Working Papers 0509, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Jeremy I. Bulow & Lawrence H. Summers & Lawrence H. Summers, 1987. "How Does the Market Value Unfunded Pension Liabilities?," NBER Chapters, in: Issues in Pension Economics, pages 81-110 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
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This page was last updated on 2009-12-7.

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