Labor Unions and Forms of Corporate Liquidity

Tong, Zhenxu

doi:10.1111/jbfa.12122

Cited by 4 publications

(3 citation statements)

References 50 publications

(87 reference statements)

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“…Consistent with prior literature (Klasa et al ., 2009; Chen et al ., 2011, 2012; Tong, 2015), we use industry unionization rates to measure union strength and union bargaining power. An important advantage of this approach is that it allows us to conduct a large-scale study of the impact of unionization on stock price crash risk.…”

Section: Methodsmentioning

confidence: 99%

“…To test these two opposing views, we examine whether labor unions are associated with stock price crash risk. Following prior literature (Klasa et al ., 2009; Chen et al ., 2011, 2012; Tong, 2015), we measure the strength of labor unions by the percentage of employed workers who are covered by a collective bargaining agreement. Using a sample of 7,937 US listed firms (67,770 firm-years) spanning the period of 1984-2013, we show that highly unionized firms exhibit lower crash risk than lowly unionized firms.…”

Section: Introductionmentioning

confidence: 99%

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Organized labor, corporate governance, and stock price crash risk

Liao

Ouyang

2017

RAF

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Purpose The aim of the paper is to investigate the effect of labor strength on stock price crash risk and related moderating mechanisms. Design/methodology/approach To examine the relationship between labor unions and stock price crash risk and, more importantly, whether corporate governance moderates this relationship. Ordinary least squares (OLS), two-stage least squares, cross-sectional analyses, industry-level regressions and firm-level regressions are conducted. Findings The results suggest a negative impact of labor union strength on stock price crash risk. Further analysis suggests strong corporate governance mechanisms may mitigate the increased stock price crash risk in less-unionized firms. Originality/value Labor unions have a long-term horizon in the firm and have strong incentives to monitor managerial opportunism. However, labor unions may also increase financial reporting opacity and collude with managers to gain bargaining power in labor negotiations. The authors’ finding suggests that labor union strength is negatively associated with stock price crash risk. This finding is consistent with the notion that labor unions curb managerial opportunism in information disclosure, resulting in reduced crash risk. More importantly, the authors find corporate governance mitigates the negative impact of reduced unionization on crash risk, providing empirical support for recent regulatory efforts to strengthen corporate governance to prevent stock market crash.

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Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Organized labor, corporate governance, and stock price crash risk

Liao

Ouyang

2017

RAF

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“…Consequently, managers facing strong labor unions have incentives to safeguard firm resources and weaken union bargaining power. For instance, to lower union rents, firms have been shown to hold less cash (Klasa, Maxwell, & Ortiz‐Molina, 2009; Tong, 2015; Tong & Huang, 2018), increase leverage (Bronars & Deere, 1991), and reduce tax aggressiveness (Chyz, Leung, Li, & Rui, 2013).…”

Section: Introductionmentioning

confidence: 99%

Disclosure tone management and labor unions

Arslan‐Ayaydin

Thewissen

Torsin

2020

Business Fin & Account

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By analyzing the influence of labor unions on the narrative content of corporate disclosures, we provide empirical evidence that managers deflate the tone of earnings press releases in order to convey to unions a less optimistic image of firm financial performance. We find that the tone of the qualitative information in earnings press releases is significantly less optimistic as the degree of unionization increases, and particularly when financial performance is strong. The results of quasi‐natural experiments suggest that labor unions causally affect the use of tone deflation, and the deflation is stronger during labor negotiations. Our findings also indicate that labor unions lead to a significant weakening of the signaling value of the tone of earnings press releases in predicting future performance.

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Do employees’ voices matter? Unionization and corporate environmental responsibility

Jiang

Yang

et al. 2021

International Review of Economics & Finance

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Labor Unions and Forms of Corporate Liquidity

Cited by 4 publications

References 50 publications

Organized labor, corporate governance, and stock price crash risk

Organized labor, corporate governance, and stock price crash risk

Disclosure tone management and labor unions

Do employees’ voices matter? Unionization and corporate environmental responsibility

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