December 2, 2022 (Friday)
Robots, Labor Market Frictions,
and Corporate Financial Policy
Using a novel dataset on industrial robots from the International Federation of Robotics (IFR), we find that the use of robots leads to higher leverage and lower cash holdings. Using an instrumental variable based on the comparative advantage of robots in specific tasks, we find that effect is likely to be causal. Further analyses show that the effect is driven by the decreases in operating leverage when firms use more robots. We also find that the effect is stronger when firms are hit by negative shocks, suggesting that the use of robots mitigates labor market frictions and increases operating flexibility. Firms with more robots pay out more and use fewer corporate hedging contracts.
Dr. Alice Liu
Alice Liu graduated from the University of Arizona with Ph.D. in finance in 2021 and now is a tenure-track assistant professor of finance at the University of South Dakota.
Her research interests are in FinTech, Machine Learning, Corporate Finance, Labor and Finance, Venture Capital, Mergers and Acquisitions, Innovation, and Tax Avoidance. Her papers have been published elite finance journals such as Journal of Banking & Finance. Her recent working papers have been accepted for presentation in several top finance conferences including AEA, NFA, FIRS, and MFA and got best paper award in several conferences.