We document and dissect a new stylized fact about firm growth: the shift from labor to intermediate inputs. This shift occurs in input quantities, cost and output shares, and output elasticities. We establish this fact using German firm-level data and replicate it in administrative firm data from 11 additional countries. We also document these patterns in micro-aggregated industry data for 20 European countries (and, with respect to industry cost shares, for the US). We rationalize this novel regularity within a parsimonious model featuring (i) an elasticity of substitution between intermediates and labor that exceeds unity, and (ii) an increasing shadow price of labor relative to intermediates, due to monopsony power over labor or labor adjustment costs. The shift from labor to intermediates accounts for one half to one third of the decline in the labor share in growing firms (the remainder is due to wage markdowns and markups) and rationalizes most of the labor share decline in growing industries.

We document and dissect a new stylized fact about firm growth: the shift from labor to intermediate inputs. This shift occurs in input quantities, cost and output shares, and output elasticities. We establish this fact using German firm-level data and replicate it in administrative firm data from 11 additional countries. We also document these patterns in micro-aggregated industry data for 20 European countries (and, with respect to industry cost shares, for the US). We rationalize this novel regularity within a parsimonious model featuring (i) an elasticity of substitution between intermediates and labor that exceeds unity, and (ii) an increasing shadow price of labor relative to intermediates, due to monopsony power over labor or labor adjustment costs. The shift from labor to intermediates accounts for one half to one third of the decline in the labor share in growing firms (the remainder is due to wage markdowns and markups) and rationalizes most of the labor share decline in growing industries.

We compare the effects of external financing shocks on patient mortality at nonprofit and for-profit hospitals. Using confidential patient-level data, we find that patient mortality increases to a lesser extent at nonprofit hospitals than at for-profit ones facing exogenous, negative shocks to debt capacity. Such an effect is not driven by patient characteristics or their choices of hospitals. It is concentrated among patients without private insurance and patients with higher-risk diagnoses. Potential economic mechanisms include nonprofit hospitals' having deeper cash reserves and greater ability to maintain spending on medical staff and equipment, even at the expense of lower profitability. Overall, our evidence suggests that nonprofit organizations can better serve social interests during financially challenging times.

Does increasing common ownership influence firms’ automation strategies? We develop and empirically test a theory indicating that institutional investors’ common ownership drives firms that employ workers in the same local labor markets to boost automation-related innovation. First, we present a model integrating task-based production and common ownership, demonstrating that greater ownership overlap drives firms to internalize the impact of their automation decisions on the wage bills of local labor market competitors, leading to more automation and reduced employment. Second, we empirically validate the model’s predictions. Based on patent texts, the geographic distribution of firms’ labor forces at the establishment level, and exogenous increases in common ownership due to institutional investor mergers, we analyze the effects of rising common ownership on automation innovation within and across labor markets. Our findings reveal that firms experiencing a positive shock to common ownership with labor market rivals exhibit increased automation and decreased employment growth. Conversely, similar ownership shocks do not affect automation innovation if firms do not share local labor markets.

This paper investigates the impact of manager-investor interaction quality on stock returns by utilizing an online IPO roadshow dataset and leveraging a word-embedding model. We find that such interactions are positively valued, as reflected in initial returns. The effect is particularly pronounced for firms characterized by higher levels of information asymmetry, greater investor attention, increased question uncertainty, or discussions on topics not covered in prospectus. Additionally, our research reveals that effective management communication leads to increased first-day turnover rates and thus higher returns. These heightened returns persist up to 180 days following the IPO, without displaying a significant long-term reversal associated with interaction quality. These findings underscore the meaningful impact of the quality of manager-investor interactions on firm valuation.

This paper investigates how state ownership affects financial reporting practices in China. Using several measures of state (government) ownership, we show that a one-standard-deviation increase in state ownership decreases financial statement comparability by 36.61%, and the impact is more pronounced when the central authority has majority control of the company. Moreover, lower earnings quality and lower levels of accounting conservatism among state-owned enterprises (SOEs) may explain the lower accounting comparability between SOEs and non-SOEs (NSOEs). Additionally, similar (different) managerial objectives converge (diverge) financial statement comparability between SOEs and NSOEs. Last, the geographical locations of firms also contribute to financial statement comparability. We employ a difference-in-differences design, changes regression and entropy balancing to mitigate potential endogeneity bias.

The recent advances in automation technology, robotics in particular, have sparked a heated debate over the future of labor and human society at large. The ongoing process of robotization may engender profound impacts on various segments of the labor market. Given the far-reaching implications of robots, it is thus very important to understand the scale and scope of robot use and characteristics of robot users. However, the main challenge is the limited availability of robot data at the microeconomic level (Raj and Seamans, 2018). Due to the data constraint, the bulk of the existing literature relies on cross-country industry-level data from the International Federation of Robotics (IFR). The lack of micro-level robot data makes it difficult to paint a comprehensive picture of robotization in industrial settings, and perhaps more importantly, to assess how within-industry firm level heterogeneity manifests itself in robot use and adoption.

This article examines how collective bargaining through unions and workplace codetermination through works councils relate to labor market imperfections and how labor market imperfections relate to employer wage premia. Based on representative German plant data for the years 1999-2016, the authors document that 70% of employers pay wages below the marginal revenue product of labor and 30% pay wages above that level. Findings further show that the prevalence of wage markdowns is significantly smaller when organized labor is present, and that the ratio of wages to the marginal revenue product of labor is significantly larger. Finally, the authors document a close link between labor market imperfections and mean employer wage premia, that is, wage differences between employers corrected for worker sorting.

This paper analyzes if lenders resolve managerial agency problems in loan contracts using sweep covenants. Sweeps require a (partial) prepayment when triggered and are included in many contracts. Exploiting exogenous reductions in analyst coverage due to brokerage house mergers and closures, we find that increased borrower opacity significantly increases sweep use. The effect is strongest for borrowers with higher levels of managerial entrenchment and if lenders hold both debt and equity in the firm. Overall, our results suggest that lenders implement sweep covenants to mitigate managerial agency problems by limiting contingencies of wealth expropriation.