Labor-saving innovations and capital structure

Jiaping Qiu, Chi Wan and Yan Wang

Journal of Corporate Finance, 2024, vol. 84, issue C

Abstract: This paper presents evidence that labor-saving technologies positively impact a firm's financial leverage. The results are robust with two different measures of labor-saving innovations: automation and process innovations. The effects are more pronounced in firms facing greater labor input rigidity, such as firms with higher labor intensity, share of minimum wage workers, and union coverage. Our analysis suggests that labor-saving innovations reduce wage rigidity, allowing firms to increase financial leverage.

Keywords: Automation; Capital structure; Labor economics; Financial leverage; Wage rigidity (search for similar items in EconPapers)
JEL-codes: G32 G33 J30 O31 O33 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:84:y:2024:i:c:s0929119923001591

DOI: 10.1016/j.jcorpfin.2023.102510

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