Can Credit Card Default Swaps Make Employees Happier?

Seminar abstract

Employees are concerned about their human capital risk when there are increases in default risk for Credit Default Swaps (CDS) firms.

We find that CDSs increase employee compensation for both non-executive and executive workers. The positive effect increase with employee's bargaining power and their expected exposure to unemployment risk.

However,

the growth of CEO compensation is mainly driven by performance-sensitive pay with higher vega in compensation structure. In addition, CDSs increase labour welfare, particularly for cash profit sharing and health and safety conditions.

These findings are consistent with the increase concerns on human capital risk and enhanced interest-alignments between shareholders and employees from CDS firms.

Booking

This event is free to attend. Please bring along you friends, colleagues and classmates.

Speaker bio

Dr Sarah Qian Wang is an Associate Professor of Finance at Warwick Business School.

She joined Warwick Business School in 2012 and holds a Ph.D in finance from the University of Hong Kong. She also holds a MSc in Economics and Finance from the University of Bristol and Bachelor of Finance from Northwest University in China.

During her Ph.D studies she spent one year as a visiting scholar at NYU Stern.

Sarah's current research interests include;

• credit risk
• credit default swaps
• corporate finance
• bankruptcy

She has presented her research at conferences organised by the American Finance Association (AFA), the American Economic Association (AEA) and the European Finance Association (EFA).

She has received the best paper awards from

• the Financial Management Association in 2009,
• the 20th Annual Conference on the Theories and Practices of Securities and Financial Markets in 2012
• Northern Finance Association Annual Meetings in 2014