Decision Sciences Journal
Volume 32, Number 4
Fall 2001
Financial Implications of the Decision to Increase Reliance
on Contingent Labor
Nandkumar (Nandu) Nayar
College of Business and Economics, 37-Rauch Business Center,
621 Taylor Street, Lehigh University, Bethlehem, PA 18015-3117,
email: nnayar@lehigh.edu
G. Lee Willinger
Michael F. Price College of Business Administration, University
of Oklahoma, Norman, OK 73019-0450, email: lwilling@ou.edu
ABSTRACT. This paper provides the first systematic
examination of the financial implications associated with increased
reliance on contingent (i.e., temporary/part-time) labor. Using
measures of performance from income statement and balance sheet
data, and stock returns, we find that the adoption of this labor
practice is associated with superior subsequent performance.
Concurrently, no increase in systematic risk and standard deviation
of stock returns is observed. The increase in performance with
no concurrent increase in systematic risk and standard deviation
of returns perhaps explains the increasing popularity of this
labor practice.
Subject Areas: Corporate Finance, Labor Management,
Labor/Staff Relations, and Optimal Contracting. |