Local attention to employees' rights and firm value: Evidence from China

With the rapid development of Chinese economy, employees' rights have received growing attention in recent years. Motivated by a series of emerging labor rights issues, we construct a search-based index of local attention to employees' rights to explore whether and how local attention to labor rights affects the value of local companies in China. We find that local attention is positively associated with firm value, and this relationship is mediated by education level of employees. Additionally, we find that the level of local attention to employees' rights can be used as an investment strategy for portfolio construction to earn positive returns.