Browsing by Author "Francisco, Paulo Morais"
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- Labour intensity and systematic riskPublication . Francisco, Paulo MoraisWe examine whether firms labour intensity raises systematic risk. Drawing on 12,250 listed, non financial companies from 93 countries, we analyse CAPM betas over five , three and two year windows and separately evaluate their upside (β+) and downside (β− ) components. OLS results show that a one standard deviation increase in labour intensity lifts the five year beta by 0.08 and loads disproportionately on downside risk. Instrumenting labour intensity in a 2SLS framework magnifies the effect, confirming a causal link. Overall, our evidence shows that labour intensive firms worldwide carry higher betas because fixed wage bills magnify operating leverage; the extra risk is most visible when markets decline, making a company’s workforce composition a key driver of its equity risk.