Financing decision and labor cost: evidence from South Asian countries

Abstract

This study investigates the effect of financial leverage on labor costs using a data sample of listed companies from Southeast Asian countries covering the period from 2009 to 2015. Using several techniques for robust results, the results show that financial leverage has a negative effect on labor costs. In addition, the study finds that the negative impact of financial leverage on labor cost tends to be less in state-owned, foreign-owned, and large companies.