| Labor Contract Law,which has been enforced since 2008 in China,has brought a significant influence to the economy by protecting the legitimate rights of workers,increasing the employment costs and weakening the flexibility of the labor market at the same time.Many domestic scholars have analyzed the economic consequences of the Law through both employee benefits and enterprise costs since the enforcement of Labor Contract Law,but there are few literatures on its impact on corporate financing decisions.This paper attempts to investigate the impact of Labor Contract Law on the firm’s debt maturity decisions from the aspects of the impact on the business risks from the Law and the legal protection of the employees,with a view to supplementing the domestic literatures on microeconomic consequences of Labor Contract Law as well as the factors influencing corporate debt maturity structure.Labor Contract Law has improved labor protection level to a large extend in China,providing an opportunity for us to investigate economic consequences of labor protection.Using a sample of Chinese listed companies over the 2001-2015 period,we analyze the relation between labor protection and corporate debt maturity,and consider labor intensity’s influence as well as marketization’s.We find robust evidence that the improvement of labor protection leads to a shorter debt maturity,while labor intensity and marketization has a significant influence on the nexus between them.Our analysis suggests:(1)the improvement of labor protection leads to a shorter debt maturity due to labor protection’s consequences of more information asymmetry,more expensive for liquidation as well as higher operating leverage and business risk that thus limited the long-term debt financing capacity of enterprises and resulted in shorter debt maturity structure;(2)Labor intensity will strengthen the relation between the debt maturity structure and labor protection while marketization will weaken it. |
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