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Corporate flexibility in a time of crisis

Publication ,  Journal Article
Barry, JW; Campello, M; Graham, JR; Ma, Y
Published in: Journal of Financial Economics
June 1, 2022

We use the COVID shock to study the direct and interactive effects of several forms of corporate flexibility on short- and long-term real business plans. We find that i) workplace flexibility, namely the ability for employees to work remotely, plays a central role in determining firms’ employment plans during the health crisis; ii) investment flexibility allows firms to increase or decrease capital spending based on their business prospects in the crisis, with effects shaped by workplace flexibility; and iii) financial flexibility contributes to stronger employment and investment, in particular when fixed costs are high. While the role of workplace flexibility is new to the COVID crisis, CFOs expect lasting effects for years to come: high workplace flexibility firms foresee continuation of remote work, stronger employment recovery, and shifting away from traditional capital investment, whereas low workplace flexibility firms rely more on automation to replace labor.

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Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

June 1, 2022

Volume

144

Issue

3

Start / End Page

780 / 806

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics
 

Citation

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Barry, J. W., Campello, M., Graham, J. R., & Ma, Y. (2022). Corporate flexibility in a time of crisis. Journal of Financial Economics, 144(3), 780–806. https://doi.org/10.1016/j.jfineco.2022.03.003
Barry, J. W., M. Campello, J. R. Graham, and Y. Ma. “Corporate flexibility in a time of crisis.” Journal of Financial Economics 144, no. 3 (June 1, 2022): 780–806. https://doi.org/10.1016/j.jfineco.2022.03.003.
Barry JW, Campello M, Graham JR, Ma Y. Corporate flexibility in a time of crisis. Journal of Financial Economics. 2022 Jun 1;144(3):780–806.
Barry, J. W., et al. “Corporate flexibility in a time of crisis.” Journal of Financial Economics, vol. 144, no. 3, June 2022, pp. 780–806. Scopus, doi:10.1016/j.jfineco.2022.03.003.
Barry JW, Campello M, Graham JR, Ma Y. Corporate flexibility in a time of crisis. Journal of Financial Economics. 2022 Jun 1;144(3):780–806.
Journal cover image

Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

June 1, 2022

Volume

144

Issue

3

Start / End Page

780 / 806

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics