ESCP Professors Thomas David and Christophe Moussu receive the 2025 Finance Best Paper Award for research exploring how labour regulation shapes the relationship between corporate debt and employee wages.
When companies take on more debt, what happens to employee wages? And how do labour laws influence that relationship?
These questions are at the heart of the award-winning research by Thomas David, Associate Professor of Corporate Finance, and Christophe Moussu, Full Professor of Corporate Finance, who have received the 2025 Best Paper Award from the Association Française de Finance (AFFI) for their article Debt and Wages: The Role of Labor Regulation, published in Finance.
The annual award recognises the most outstanding paper published in the journal during the year and honours research that makes a significant contribution to the field of finance.
Understanding the relationship between corporate debt and employee pay
Corporate debt affects much more than a company’s balance sheet. It can also shape the relationship between employers and employees.
In their paper, Professors David and Moussu examine how financial leverage, i.e. the proportion of debt used to finance a company, interacts with employment protection legislation to influence employee compensation.
Drawing on data from more than 12,000 listed companies across 21 OECD countries between 1990 and 2018, the researchers show that stronger labour protections significantly moderate the relationship between corporate leverage and wages.
Using a stacked difference-in-differences methodology and analysing major labour market reforms across countries, the study demonstrates that employment protection laws influence how firms balance financial decisions with employee compensation. The research also highlights how creditor rights, wage bargaining systems and unionisation further shape these dynamics.
The findings contribute to growing research at the intersection of corporate finance, labour economics and public policy, offering valuable insights for academics, business leaders and policymakers.
A research idea over twenty years in the making
Behind the award-winning paper lies a story that illustrates how research often develops over many years.
The initial idea emerged more than two decades ago during an executive finance training session, following a discussion between Professor Christophe Moussu and a finance executive participating in the programme.
The conversation raised an important question about the relationship between corporate financing decisions and employment outcomes, one that eventually evolved into an ambitious international research project.
Professor Moussu also highlighted the crucial contribution of his co-author, Professor David, particularly in assembling and analysing the extensive international dataset that underpins the study.
Research inspired by dialogue between academia and practice
This appointment is the latest expression of Frédéric Genta’s active commitment to
The paper reflects one of ESCP’s strengths: research that connects rigorous academic methods with questions arising from real-world business practice.
Reflecting on receiving the award, Professor Moussu also paid tribute to his late father, Professor Robert Moussu, whose words continue to guide his work:
La théorie est l’œil qui éclaire l’objet. (Theory is the eye that illuminates the object.)
The quotation captures the spirit of the research: using robust evidence to better understand complex economic and organisational challenges.
Recognising excellence in finance research
The award was presented by the Association Française de Finance (AFFI), France’s leading academic association for finance research.
According to the award jury, the paper makes “a valuable contribution to the Labor and Finance literature,” highlighting its robust empirical methodology, international scope and careful investigation of the mechanisms linking corporate leverage and employee compensation.
Congratulations to Professors Thomas David and Christophe Moussu on this well-deserved recognition and on advancing research that deepens our understanding of the connections between finance, labour markets and public policy.
Professor Christophe Moussu at the 42nd International Conference of the French Finance Association (AFFI), where his and Professor Thomas David's paper Debt and Wages: The Role of Labor Regulation received the 2025 Best Paper Award. Related link
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