학회소식
[2013년 제 4차] Outsourcing Supply Contracts, Human Capital and Fir
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2013-12-16
We examine the impact of outsourcing supply contracts on the riskiness of firm cash flows and their financing decisions controlling for the endogeneity of firm outsourcing decisions. We and that rm outsourcing is associated with lower volatility of firm cash flows and lower financial leverage - in particular during the recent financial crisis. We show that the effect of outsourcing on financial leverage is more negative when firms operate in high value-added, high R&D industries. We document that when outsourcing firms issue financial securities, they are more likely to issue equity and private securities. These results are robust to instrumenting the outsourcing decision with geographic instruments that capture the distance to ports and major airports. These findings are consistent with outsourcing firms choosing a capital structure that reduces their financial leverage in order to maintain incentives for their employees and suppliers to invest in firm-specific assets and to decrease the expected costs of financial distress on human capital.
