| This study investigates three issues related to the multiple work arrangements based on independent contractors and company employees. First, does the concentration of managerial ownership affect the proportion of independent contractors? Second, does the proportion of independent contractors affect the level and the variance of labor productivity? Third, does the proportion of independent contractors provide incremental information over the traditional financial performance measures for forecasting the change in return on assets one year ahead? Using the Motor Carrier Financial & Operating Information database, I first compare the proportion of independent contractors across firms with low levels of managerial ownership, i.e., those that are publicly-traded, and firms with high levels of managerial ownership, i.e., those that are privately-held. The findings suggest that publicly-traded trucking companies on average deploy a significantly higher level of soft capacity than privately-held companies. However, I do not find any evidence for the difference between the publicly-traded and privately-held trucking companies in the change of the proportion of independent contractors when they expect a temporary change in sales. Second, I compare the level and the variance of labor productivity across firms with different proportions of independent contractors. The findings suggest that the proportion of independent contractors is significantly associated with the level and the variance of labor productivity. Third, when changes in asset turnover, changes in profit margin, return on assets and growth in net operating assets are employed to represent traditional accounting information; I find that the proportion of independent contractors provides incremental information about future profitability. These results provide empirical evidence for the influence of concentration of managerial ownership on the multiple work arrangements. The results also provide insight on how production capacity based on multiple work arrangements affects labor productivity and how it can be used to forecast profitability. |
