Accounting & Finance Research Community Seminar – Dr Erwei (David) Xiang

Title: Robot adoption and the cost of debt
Speaker: Dr Erwei (David) Xiang
Date: 02 November 2022
Time: 12:00-13:00
Location: NUBS 1.13

If you would like to attend, please register using the following link: https://forms.office.com/r/GeShJr3Gqi.

Abstract
This paper empirically examines the impact of firms’ robot adoption on their cost of debt. We find that firms that adopt robots enjoy a reduction in the cost of bank loans by 5.47% compared with those that do not adopt robots. Moreover, firms that adopt robots get more new bank loans, more long-term loans, and lower rates of bank loans than their peers that do not adopt robots. Mechanism tests reveal that the adoption of robots helps firms reduce operating costs, increase efficiency, and optimize the structure of labour force, which is conducive to reducing the default risk, and in turn, the cost of bank loans. More interestingly, our heterogeneity tests show that the benefits of robot adoption are further profound for young firms, small firms, firms with a low level of political connection, and firms located in regions with a high degree of marketization of the financial industry. Our results are valid after addressing potential endogeneity concerns and remain unchanged in various robustness tests. Overall, our findings offer additional empirical evidence on the benefits of robot adoption at the firm level.