Abstract
This doctoral thesis comprises three essays within the field of empirical corporate finance, each interconnected, collectively providing comprehensive insights into workers’ wage outcomes and the dynamics of sustainability within corporate operations.
Utilizing national Swedish administrative employer-employee matched data, the first chapter – How do Local Mergers Affect Workers’Wage?, delves into the direct impact of mergers on workers and the indirect monopsony effect of local mergers on individuals within the same local labor market. Employing a matched time-varying difference-indifferences design, this study reveals a concurrent monopsony effect of a 2.4% drop inwage growth spreading to individuals within the same local labor market but outside M&A related firms. The monopsony effect is more accentuated in highly concentrated labor markets, among jobs closely linked to specific industries, and among workers engaged in routine tasks. In addition, the analysis indicates that M&A workers employed in branches within the same geographic area as those of the acquiring firm experience even lower wage growth compared to their counterparts in other branches of the same firm. These findings remain statistically significant under different robustness checks using various subsamples. Overall, these results strongly imply that if M&A activities elevate local labor market concentration, they will exert downward pressure on wages, thereby underscoring the influential role of local-level labor market monopsonies on wage growth.
In the second chapter, The Sustainability Wage Gap, using administrative employer employee matched data, we provide evidence that workers earn substantially lower wages in more sustainable firms. Examining both cross-sectional and time-series heterogeneity, we find that the wage gap is larger for high-skilled workers and increasing over time. We hypothesize that this Sustainability Wage Gap arises because workers with preferences for sustainability accept lower wages to work in more environmentally sustainable firms. Using a battery of additional tests, we argue that our results are difficult to reconcile with many alternative interpretations suggested in prior research such as a better work-life balance or better career opportunities.
The third chapter – Spillover Effects in Firms’ ESG Disclosure, employs the reform of the registration-based IPO system in China as a quasi-experiment to examine whether there are spillover effects of ESG practices across firms. The findings suggest that spillovers exist and lead to an improvement in firms’ ESG practices. Specifically, firms’ ESG practices significantly improve following the first registration-based IPO in their industry. We identify the mechanisms through which spillover effects are transmitted, including competition and governance channels. We document that by increasing market competition, coupled with a push from institutional investors, firms were incentivized to improve their ESG disclosure, highlighting the profound impact of this reform on Chinese capital markets.