Corporate leverage and the terms of employment: evidence from French small businesses before and during the global crisis - Audencia Access content directly
Journal Articles Applied Economics Year : 2017

Corporate leverage and the terms of employment: evidence from French small businesses before and during the global crisis

Abstract

Despite the particular importance of corporate leverage and human capital for small businesses, little is surprisingly known about the relationship between these two factors for this category of firms. Accordingly, this article tries to fill this gap by investigating the relationship between leverage and human capital examined through the investment in employee-related expenditure. The analysis focuses on a sample of French listed small businesses before and during the recent global crisis. The empirical findings show that leverage serves as a monitoring mechanism of corporate managers prone to over or underinvest in employee-related expenditure to obtain private benefits. Due notably to the availability of debt, this monitoring is more effective before the crisis period, especially for low growth firms. Overall, these results provide support to the theory that leverage has a disciplining role. Simultaneously, they lead to moderate the strength of this role according to the global crisis. Thus, they should provide useful insights for academics, regulators, managers and credit institutions.
No file

Dates and versions

hal-01477157 , version 1 (27-02-2017)

Identifiers

Cite

Ramzi Benkraiem, Mondher Bouattour, Anthony Miloudi, Ludovic Vigneron. Corporate leverage and the terms of employment: evidence from French small businesses before and during the global crisis. Applied Economics, 2017, 49 (23), pp.2286-2297. ⟨10.1080/00036846.2016.1237755⟩. ⟨hal-01477157⟩
227 View
0 Download

Altmetric

Share

Gmail Facebook X LinkedIn More