Management, directly or indirectly, learns from its firm's stock price, so a more informative stock price should make the firm more productive. We show that stock price informativeness increases firm productivity. We provide direct evidence of one channel through which stock price informativeness affects productivity; specifically, we find that CEO turnover is less sensitive to Tobin's q when informativeness is lower. We predict and confirm that the productivity of smaller and younger firms, better governed firms, more specialized firms, and firms with more competition is more strongly related to the informativeness of their stock price. We further address endogeneity concerns with the use of brokerage closures, S&P 500 additions, and mutual fund redemptions as plausibly exogenous events.

We study the effects of state-level Paid Family Leave (PFL) laws on US firms across a broad panel of private and public companies. Following PFL adoption, female employee turnover declines, labor productivity increases, and treated firms experience significant improvements in operating performance. These effects are stronger in regions with a larger supply of childbearing-age female labor, among R&D-intensive firms and firms with high intangible capital, consistent with a mechanism in which PFL reduces job separation expectations and encourages investment in firm-specific human capital. Our findings suggest that PFL can generate tangible firm-level benefits by enhancing workforce stability and productivity.