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Business Groups and Employment

Author

Listed:
  • Mara Faccio

    (Krannert School of Management, Purdue University, West Lafayette, Indiana 47907; Asian Bureau of Finance and Economics Research, National University of Singapore Business School, Singapore 117592; European Corporate Governance Institute, Royal Academies of Belgium, Palace of the Academies, 1000 Brussels, Belgium; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • William J. O’Brien

    (School of Business Administration, The University of Illinois at Chicago, Chicago, Illinois 60612)

Abstract

Using a newly assembled 50-country firm-level database spanning 19 years, we document a bright side for employees of business group–affiliated firms: less pronounced fluctuations in employment than unaffiliated firms in response to macroeconomic shocks. The results are robust to a variety of tests designed to mitigate endogeneity concerns, including propensity score matching and comparisons of successful and failed group integrations, and are present in both booms and recessions. Our results are most consistent with group internal labor markets rather than several alternative explanations (internal capital markets, a lower overall sensitivity to shocks in group firms, or agency problems).

Suggested Citation

  • Mara Faccio & William J. O’Brien, 2021. "Business Groups and Employment," Management Science, INFORMS, vol. 67(6), pages 3468-3491, June.
    • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:6:p:3468-3491
    DOI: 10.1287/mnsc.2020.3616
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    References listed on IDEAS

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