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This research examines how financial constraints affect firm behavior and how a financially constrained firm’s employees conditionally influence the impact of those constraints. Types of constraints studied here include restricted access to commercial bank credit, venture capital financing, and public bond and equity markets.

This research tests whether employees alleviate financial constraints by deferring wages until firms can pay them. It also examines the alternative hypothesis that workers exacerbate financial constraints by requiring higher upfront wages as compensation for the higher risk of failure that a financially constrained firm faces, leading such a firm to invest less in the development and training of its employees.

Tania Babina
Timothy Dore
Paige Ouimet
Geoffrey Tate
Liu Yang
Rebecca Zarutskie

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