Labor Adjustment Costs and Risk Management
研究劳动力调整成本如何影响企业风险管理，发现劳动保护法会促使企业更多使用外汇衍生品，并增加现金持有，尤其在不使用衍生品对冲的企业中更明显。
This paper studies the effects of labor adjustment costs on corporate risk management. Labor adjustment costs attenuate the correlation between the internal funds of a firm and its investment opportunity, and create more incentives for the firm to smooth internal funds. Using a state border discontinuity approach, I find that state-level labor protection laws significantly impact a firm’s use of foreign currency derivative contracts. I further find that a firm holds more cash when labor adjustment costs are larger, and such an effect concentrates on firms that do not engage in derivative hedging.