Labor unemployment risk and corporate financing decisions

• 成果类型: Article
• 署名作者: Agrawal, Ashwini K.; Matsa, David A.
• 署名单位: New York University; Northwestern University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2012.11.006
• 发表日期: 2013
• 页码: 449-470
• 关键词: capital structure; Financial distress; Unemployment risk; Compensating wage differentials

摘要

This paper presents evidence that firms choose conservative financial policies partly to mitigate workers' exposure to unemployment risk. We exploit changes in state unemployment insurance laws as a source of variation in the costs borne by workers during layoff spells. We find that higher unemployment benefits lead to increased corporate leverage, particularly for labor-intensive and financially constrained firms. We estimate the ex ante, indirect costs of financial distress due to unemployment risk to be about 60 basis points of firm value for a typical BBB-rated firm. The findings suggest that labor market frictions have a significant impact on corporate financing decisions. (C) 2012 Elsevier B.V. All rights reserved.