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Automation exposure and operating performance

Author

Listed:
  • Liu, Lei
  • Li, Tianze
  • Phan, Quoc
  • Wu, Zhenyu
  • Zheng, Steven Xiaofan

Abstract

We find that firms experiencing increases in exposure to new automation technology see deteriorating operating performance in subsequent years. This pattern is driven by financially constrained firms. For firms without financial constraints, increases in automation exposure are associated with increases in profits, increases in fixed assets and employees, decreases in selling, general, and administrative expenses, and increases in profit margin. For firms with financial constraints, increases in automation exposure are positively related to changes in expenses and negatively related to profit margin. It seems firms without financial constraints are in better positions to take advantage of innovations in automation technology.

Suggested Citation

  • Liu, Lei & Li, Tianze & Phan, Quoc & Wu, Zhenyu & Zheng, Steven Xiaofan, 2024. "Automation exposure and operating performance," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005312
    DOI: 10.1016/j.frl.2024.105501
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    References listed on IDEAS

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    1. Katja Mann & Lukas Püttmann, 2023. "Benign Effects of Automation: New Evidence from Patent Texts," The Review of Economics and Statistics, MIT Press, vol. 105(3), pages 562-579, May.
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    3. Knesl, Jiří, 2023. "Automation and the displacement of labor by capital: Asset pricing theory and empirical evidence," Journal of Financial Economics, Elsevier, vol. 147(2), pages 271-296.
    4. repec:bla:jfinan:v:59:y:2004:i:4:p:1777-1804 is not listed on IDEAS
    5. Antony, Jürgen & Klarl, Torben, 2020. "The implications of automation for economic growth when investment decisions are irreversible," Economics Letters, Elsevier, vol. 186(C).
    6. Efraim Benmelech & Michal Zator, 2022. "Robots and Firm Investment," NBER Working Papers 29676, National Bureau of Economic Research, Inc.
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