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Corporate Financial Frictions and Employee Mental Health

Published online by Cambridge University Press:  02 May 2023

Dániel Kárpáti  and
Luc Renneboog Open the ORCID record for Luc Renneboog [Opens in a new window]
Dániel Kárpáti
Affiliation:
Tilburg University Department of Finance d.karpati@uvt.nl
Luc Renneboog*
Affiliation:
Tilburg University Department of Finance
*
luc.renneboog@uvt.nl (corresponding author)
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Abstract

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This article argues that corporate financial frictions can have an adverse effect on employee mental health, an important determinant of employee productivity. To identify the causal effects of financial frictions, we exploit variation in firms’ need to refinance their long-term debt in 2008, a period when refinancing became more difficult due to the credit crunch. Using administrative microdata, we find that antidepressant use grows significantly more among employees of firms in higher need of debt refinancing. Much of this effect occurs at employees keeping their jobs, pointing to decreased perceptions of job security as a transmission channel.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 59 , Issue 5 , August 2024 , pp. 2256 - 2298
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives licence (https://creativecommons.org/licenses/by-nc-nd/4.0), which permits non-commercial re-use, distribution, and reproduction in any medium, provided that no alterations are made and the original article is properly cited. The written permission of Cambridge University Press must be obtained prior to any commercial use and/or adaptation of the article.
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

Results are based on calculations by Dániel Kárpáti of Tilburg University using nonpublic microdata from Statistics Netherlands. The research for this publication was partly funded by the Open Data Infrastructure for Social Science and Economic Innovations (ODISSEI) in the Netherlands (www.odissei-data.nl).

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