Labor Market Peer Firms

I show that labor market peer firms (LMPs) are exposed to common input and output market shocks that affect firm value. I identify LMPs by analyzing members' online viewing patterns on LinkedIn, a professional networking and corporate recruiting website. LMPs exhibit significant incremental power over standard output-market based industry groupings to explain cross-sectional variation in firms' stock returns and accounting-based performance metrics. I also create a measure of skill-similarity across firms using LinkedIn members' self-reported skills. When firms within the same labor market group share more skills, LMPs outperform standard industry groupings to explain return co-movements. Overall, this paper highlights the importance of employee disclosures through social networks in measuring firms' exposure to common shocks.