Skewed Distribution, Leverage Responded and Win-win Labor-capital Relation
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| Title | Skewed Distribution, Leverage Responded and Win-win Labor-capital Relation
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| Author | Liu Bin and Wang Lei |
| Organization | School of Economics and Business Administration，Chongqing University |
| Email | drliubin@263.net；wanglei6943@163.com |
| Key Words | Contract Labor Law; Skewed Distribution; Leverage Responded; Win-win Labor-capital Relation |
| Abstract | This paper examines whether the implementation of labor contract law increased distribution proportion of compensation for China’s A-share listed firms during the year 2002-2013. Based on this understanding, we further inspect those firms’ rational response which is increasing two kinds of leverage, and finally its influence on firms’ return on equity. The results show that the enforcement of labor contract law improves distribution proportion of compensation and two kinds of corporate leverage. We also confirm that the return on equity is increased after the enforcement of labor contract law, which benefit from corporate leverage. Furthermore, the increase of two kinds of leverage and firms’ market value are inverted U-sharped relationship. We suggest that the enforcement of labor contract law protects the workers’ legal interest and improves firms’ return on equity by leverage response, which achieves a win-win labor-capital relation. However, the potential risk from the increase of two kinds leverage requires urgent attention. |
| Serial Number | WP831 |
| Time | 2015-03-10 |
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