Corporate governance and labor investment efficiency: International evidence from board reforms
利用41个国家董事会改革的外生冲击，研究发现改革通过减少过度雇佣、解雇不足等问题提升劳动力投资效率，且效果受董事会独立性、外资持股、企业社会责任等因素影响。
Abstract Research Question/Issue This study investigates whether and how board reforms affect labor investment efficiency using a difference‐in‐differences analysis of board reforms in 41 countries worldwide as an exogenous shock. Research Findings/Insights Board reforms are positively associated with labor investment efficiency because they benefit firms in reducing over‐hiring, under‐firing, under‐hiring, and over‐firing. Further, we show that the positive effect is more pronounced among firms with lower board independence before the reforms, firms with high institutional foreign ownership, firms with higher corporate social responsibility (CSR), and labor‐intensive firms. While countries with rule‐based reforms experience a greater reduction in abnormal net hiring post‐reform, the effects of reforms are similar across civil and common law countries. Further analyses reveal that in countries with higher employment protection legislation, the beneficial relationship between board reforms and labor investment efficiency is weaker. Theoretical/Academic Implications Our study suggests that one of the mechanisms linking board reforms and labor investment efficiency is a reduction in frictions, such as moral hazard and adverse selection, which hamper efficient labor investment. To the best of our knowledge, this is the first international study that explores globally the relationship between board reforms and firm labor policies, in particular, labor investment efficiency. Practitioner/Policy Implications Given the importance of identifying and confirming the role of corporate governance in human capital investment efficiency, our empirical investigation provides useful insights and policy implications for managers in building efficient labor policies.