Capital structure and labour demand: further evidence

Holger Görg and Eric Strobl ()

Applied Economics Letters, 2001, vol. 8, issue 11, 719-723

Abstract: This paper provides further evidence on the relationship between a firm's capital structure and its labour demand. This study estimates dynamic labour demand equations using firm-level panel data for firms in the electronics sector in Ireland for the period 1982 to 1995. These results suggest that labour demand is not affected by a firm's capital structure, proxied by its debt-to-asset ratio. This may give statistical support to the Modigliani-Miller theorem, which conjectures that the market value of a firm is not influenced by its capital structure, implying that a firm's labour demand decision is independent of capital structure.

Date: 2001
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DOI: 10.1080/13504850010029480

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