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The Role of Peer Effects in Corporate Employee Welfare Policies

Author

Listed:
  • Asad Ali Rind

    (School of Management [Bradford] - University of Bradford)

  • Saeed Akbar

    (School of Management [Bradford] - University of Bradford)

  • Sabri Boubaker

    (EM Normandie - École de Management de Normandie = EM Normandie Business School, VNU - Vietnam National University [Hanoï])

  • Souad Lajili Jarjir

    (IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel)

  • Sabur Mollah

    (Sheffield University Management School - University of Sheffield [Sheffield])

Abstract

This paper investigates the role of peer effects in the employee welfare policies of organizations. Using US panel data for a sample of 11,451 firm-year observations from 1996 to 2017, we find that firms' employee welfare decisions are driven by their peers and show that peer firms play a significant role in defining corporate employee welfare policies. Our findings are robust to various sensitivity checks, including alternative definitions of employee welfare, alternative peer proxies and several identification strategies. Our additional analysis shows that herding behaviour is prevalent in followers, who mimic leaders'behaviour, but we do not find any such relationship for industry leaders. Further, we show evidence suggesting that mimetic and normative isomorphic pressures are driving the peer effects. Finally, we examine the economic consequences of peer mimicking in employee welfare policies and show that it improves focal firms' value and innovation. Our findings on firms' peer effects and herding behaviour have policy implications.

Suggested Citation

  • Asad Ali Rind & Saeed Akbar & Sabri Boubaker & Souad Lajili Jarjir & Sabur Mollah, 2021. "The Role of Peer Effects in Corporate Employee Welfare Policies," Post-Print hal-03241471, HAL.
    • Handle: RePEc:hal:journl:hal-03241471
    DOI: 10.1111/1467-8551.12513
    Note: View the original document on HAL open archive server: https://hal.science/hal-03241471v1
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    References listed on IDEAS

    as
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    2. Chen, Chen & Chen, Yangyang & Hsu, Po-Hsuan & Podolski, Edward J., 2016. "Be nice to your innovators: Employee treatment and corporate innovation performance," Journal of Corporate Finance, Elsevier, vol. 39(C), pages 78-98.
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    7. Pornsit Jiraporn & Napatsorn Jiraporn & Adisak Boeprasert & Kiyoung Chang, 2014. "Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification," Financial Management, Financial Management Association International, vol. 43(3), pages 505-531, September.
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    Cited by:

    1. Su, Zhifang & Wang, Luhan & Liao, Jing & Cui, Xin, 2023. "Peer effects in corporate advertisement expenditure: Evidence from China," Research in International Business and Finance, Elsevier, vol. 64(C).
    2. Ali-Rind, Asad & Boubaker, Sabri & Jarjir, Souad Lajili, 2023. "Peer effects in financial economics: A literature survey," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Hou, Xiaohui & Zhao, Jingwen, 2024. "Impact of regulating political connections on employee welfare attitude: Evidence from China," Journal of Asian Economics, Elsevier, vol. 93(C).

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