We study manufacturing firms' asymmetric inventory investment in response to sales changes. Focusing on the costs of resource adjustment and stockout which likely differ in sales-increasing and sales-decreasing periods, we predict and find that inventory investment declines less during periods...

We examine the role of financial reporting quality in facilitating corporate employment. Labor creates operating leverage due to wage rigidity and lacks collateral value, both of which increase credit risk and the importance of information in debt markets. We use firms' predetermined debt...

The literature suggests that the presence of a labor union poses operational risk for firms by reducing operating flexibility. We posit that managers stockpile inventory in response to their heightened operational risk, such as potential strikes, so that managers maintain bargaining power in...