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

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

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