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Professor Chen Chen
Professor | Deputy Head | Department of Accounting
Monash Business School
Monash University

This paper examines how firms adjust their hiring practices in response to capital market pressure. Using analysts’ queries during conference calls as a proxy for the market’s expectations regarding future hiring, we find that firms increase the number of job postings following such calls. However, they also shorten job posting durations and relax hiring requirements related to skills, experience, and education—changes that are most pronounced shortly after the call. These shifts in hiring criteria affect the quality of new hires, who tend to possess fewer self-disclosed skills, lower educational attainment, and less experience. Additionally, post-call hires are more likely to leave the firm early and face greater difficulty securing subsequent employment. Finally, we document negative capital market consequences: firms that engage in lower-quality hiring under pressure experience significantly lower stock returns in the following months. Collectively, our findings suggest that hiring under capital market pressure compromises new hire quality and can harm firm performance.