Using an occupational probability of computerization, we measure a firm’s ability to replace labor with automated capital. Our evidence suggests that the potential to automate a workforce enhances operating flexibility, allowing firms to hold less precautionary cash. To provide evidence for...

We document that a firm's ability to substitute automated capital for labor is an important determinant of corporate financial policy. Using a novel occupational measure for labor's susceptibility to automation, we show that firms with a more substitutable workforce hold less cash, use more...