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Publications [#325834] of Matthias Kehrig

Papers Submitted

  1. Donangelo, A; Gourio, F; Kehrig, M; Palacios, M, The cross-section of labor leverage and equity returns (May, 2019), pp. 497-518, Elsevier BV [doi]
    (last updated on 2019/06/18)

    Abstract:
    © 2018 The relative size and inflexibility of labor expenses lead to a form of operating leverage, which we call labor leverage. We derive a set of conditions for the existence of labor leverage even when labor markets are frictionless. Our model provides theoretical support for the use of firm-level labor share as a measure of labor leverage. Using Compustat/CRSP and confidential Census data, we provide evidence for the existence and for the economic significance of labor leverage: high labor share firms have operating profits that are more sensitive to economic shocks and have higher expected returns.


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