Quotation Rettl, Daniel, Stomper, Alex, Zechner, Josef. 2022. The Stability of Dividends and Wages: Effects of Competitor Inflexibility. Corporations and Covid-19 2022, Dublin, Irland, 01.06.




We analyze how industry-wide risks are shared between firms' employees and their owners. Focusing on the electricity industry, we study firms which are subject to similar risks but use different production technologies. We document that firms are more exposed to industry shocks when their competitors use lower-cost production technologies, since this mitigates their response to negative demand shocks. This "competitor inflexibility" destabilizes payouts to equityholders, but there is no evidence that it compromises wage stability. Firms do not share systematic risk due to competitor inflexibility with their employees and set wages as if their shareholders' risk preferences were given.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title The Stability of Dividends and Wages: Effects of Competitor Inflexibility
Event Corporations and Covid-19 2022
Year 2022
Date 01.06.
Country Ireland
Location Dublin
JEL D22, G35, J33, J41, L13, L94


Zechner, Josef (Details)
Rettl, Daniel (University of Georgia, United States/USA)
Stomper, Alex (Humboldt University of Berlin, Germany)
Institute for Finance, Banking and Insurance IN (Details)
Research Institute for Capital Markets FI (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
5305 Bank management (Details)
5307 Business and management economics (Details)
5358 Corporate finances (Details)
5361 Financial management (Details)
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