Automation exposure and operating performance

Lei Liu, Tianze Li, Quoc Phan, Zhenyu Wu and Steven Xiaofan Zheng

Finance Research Letters, 2024, vol. 65, issue C

Abstract: We find that firms experiencing increases in exposure to new automation technology see deteriorating operating performance in subsequent years. This pattern is driven by financially constrained firms. For firms without financial constraints, increases in automation exposure are associated with increases in profits, increases in fixed assets and employees, decreases in selling, general, and administrative expenses, and increases in profit margin. For firms with financial constraints, increases in automation exposure are positively related to changes in expenses and negatively related to profit margin. It seems firms without financial constraints are in better positions to take advantage of innovations in automation technology.

Keywords: Automation; Technology; Innovation; Operating performance; Financial constraints; Capital expenditure (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005312

DOI: 10.1016/j.frl.2024.105501

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