Nonregular Employment and Payout Policy: Evidence from the Massachusetts Independent Contractor Law

• 成果类型: Article
• 署名作者: Hwang, JiHoon; Kahle, Kathleen M.
• 署名单位: University of Arizona
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.00103
• 发表日期: 2024
• 页码: 6415-6437
• 关键词: independent contractor; nonregular employment; REPURCHASES; payout policy; Operating leverage

摘要

Compared with regular employees, independent contractors (ICs) offer labor flexibility and cost savings to their employers. Using a difference-in-differences design around the 2004 Massachusetts law that discourages IC usage, we find that this exogenous decrease in IC usage makes treated firms' earnings more sensitive to changes in sales, increases labor-related expenses, and reduces profitability. Firms subsequently reduce share repurchases. The decrease is more pronounced for firms with high operating leverage and financial constraints. Our results are robust to entropy balancing. We conclude that IC usage affects firms' operating leverage and profitability, which in turn, influence payout policy.