The effect of financial leverage on labor cost in Southeast Asian Countries

Abstract

The study investigates the impact of financial leverage on labor cost in Southeast Asian firms in the period from 2009
to 2015. Various approaches including pooled ordinary least square (OLS), random effect (RE), fixed effect (FE) and
system GMM regressions are applied to analyze data. The research findings indicate that there is a negative relation
between financial leverage and labor cost. This result supports agency theory as well as financial distress predictions.