Department/School
Finance
Date of this version
2022
Document Type
Article
Keywords
listed firms, payroll costs, labor economics, industry concentration, stock market
Abstract
The number of exchange-listed firms has declined dramatically in the U.S. We argue that increases in payroll cost decrease the firm’s output and consequently, the need for capital. Thus, fewer new firms list on exchanges. Similarly, more firms delist as payroll costs reduce profits. We find empirical results that support our hypotheses. The results are stronger when firms are located in areas with greater regulatory restrictions on residential use of land - suggesting that increases in payroll costs is one of the factors driving this phenomenon.
Published in
Quarterly Review of Economics and Finance
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.