Labor-Replacing Automation and Finance

• 成果类型: Article
• 署名作者: Cheng, Xin; Lyandres, Evgeny; Zhou, Kaiguo; Zhou, Tong
• 署名单位: Zhongnan University of Economics & Law; Tel Aviv University; Monash University; Capital University of Economics & Business; Southern University of Science & Technology
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.02658
• 发表日期: 2025
• 关键词: automation; industrial robots; hedging; leverage; Interest rates; Labor costs

摘要

We examine the effects of adoption of labor-replacing automation technology on corporate financing. Empirically, using Chinese firm-level panel data on deployment of industrial robots as an example of such automation, we find that robot adoption increases leverage and reduces cost of debt. We hypothesize that the underlying reason is that being a substitute for labor, automation provides a hedge against fluctuations in labor costs. A model based on this hedging argument delivers additional testable predictions concerning determinants of the relation between automation and corporate financing. These relations are borne out in the data, providing support for the proposed mechanism. Our evidence is inconsistent with alternative channels behind the observed relations.