Does external labour market activeness affect agency problem?
利用美国各州法院对不可避免披露原则的逐步认可作为外部劳动力市场活跃度下降的冲击，研究发现该原则认可后管理者更少进行帝国构建行为，从而降低代理成本并提升企业绩效，且该效应在职业担忧较高的管理者中更显著。
This study examines the relationship between external labour market and the agency problem. Exploiting the staggered recognition of the Inevitable Disclosure Doctrine (IDD) by US state courts to capture a drop in external labour market activeness, we examine whether and how the activeness of external labour market affects managers' empire building behaviour. We find that in IDD-recognising states, managers are less engaged in empire-building activity, thus reducing agency costs and improving firm performance. The effect is concentrated in managers with heightened career concern where their firms experience higher degrees of financial constraints or operate within an industry of more intense in-state competition. We also rule out alternative explanations in which lower levels of empire building are associated with managers pursuing a quiet life or underinvestment. Our results hold for a battery of robustness tests and offer insights into the disciplining role of external labour markets in mitigating the agency problem. • We show that managers are less likely to engage in empire building after IDD recognition. • The effects are concentrated among managers with heightened career concerns. • We rule out the possibility that a lower level of empire building leads to any form of inefficiency. • We show that reduced empire building leads to better firm performance.