دانلود رایگان مقاله انگلیسی بیمه بیکاری کارکنان و دارایی های نقدی شرکت - نشریه الزویر

ABSTRACT

This paper presents evidence that firms conserve cash to manage employees’ perceptions of the risk of becoming unemployed. Employing a matched sample design and using state level changes in unemployment insurance (UI) benefits to proxy for unemployment risk, we test the hypothesis that cash holdings and unemployment risk are positively related. We find an economically and statistically significant association between decreases in cash holdings, following an increase in UI benefits (i.e., lower unemployment risk). Our findings are robust to alternative specifications and we find that the positive relation between cash holdings and unemployment risk is more pronounced for firms that are more labor intensive, have a high layoff propensity, have a higher fraction of low-wage workers, and are in industries with a higher fraction of UI recipients. Overall, our results are consistent with the idea that cash holdings are affected by not only shareholders but also other stakeholders: namely employees.

6. Conclusion

The labor economics literature posits that employees care about unemployment risk because they face substantial costs of unemployment, in the form of personal and emotional distress. Firms care about this risk as well, as employees demand compensation wage differentials to offset this risk. Following extant literature, we posit that firms manage workers’ perception through maintaining substantial financial resources, such as cash. Specifically, we hypothesize and test that firms may change cash levels to manage the perceptions that employees may have of unemployment risk. Using the ratio of cash to net assets to measure firms’ cash holdings and unemployment insurance benefits as a proxy for unemployment risk, we provide empirical evidence that firms decrease cash levels in response to prior year increases in UI benefits. The results in all of our regression models are consistent with this hypothesis and are both economically and statistically significant.

We enhance our identification and check the robustness of our findings by adding a falsification test and controlling for local macro-economic effects and political considerations, by investigating the effects of having a dispersed workforce, and by using alternative measures of benefits and cash holdings. We also analyze the association of cash holdings and UI benefits, depending on the importance of expected labor unemployment costs. To do so, we employ various cross-section tests labeling firms operating as labor intensive, having a high propensity to lay employees off, having a higher fraction of low-wage workers, and having a higher fraction of UI benefit recipients as those that are more likely to care about the relation between unemployment risk and cash holdings. We present evidence that is consistent with the idea that, for these firms, the relation between cash holdings and UI benefits is indeed more pronounced. In addition, we rule out alternative explanations that decreases in cash levels and increases in UI benefits are the result of cash flow effects or changes in union bargaining power. Overall, our findings support our main hypothesis that decreases in cash holdings are associated with increases in UI benefits.