The Shareholder Wealth Effects of the Pennsylvania Fourth Generation Antitakeover Law

Southern Economic Journal

Voos

2000

This article is an empirical examination of whether or not stockholder wealth rises in response to passage of a right‐to‐work law—a state law banning union security clauses from collective bargaining agreements. Stockholder wealth rose when Louisiana passed such a law in 1976 and when Idaho did so in 1985‐1986. Presumably this occurred because investors anticipated higher future profits with weaker labor unions or a lower probability of future organization. This is new evidence that such laws are more than symbolic: They hamper labor unions.

Section: Empirical Results: Louisianamentioning

confidence: 99%

Section: Event Studies Of Unions Profitability and Shareholder Wealth (Returns)mentioning

confidence: 99%

Right‐to‐Work Laws: New Evidence from the Stock Market

Southern Economic Journal

Voos

2000

“…Therefore, if an event will impact the future profitability of a firm, its firm stock price will adjust immediately in response. While there are critics of event studies and the efficient market hypothesis (Banerjee, 1992;Bikhchandani et al, 1991), most scholars who have investigated the subject of market efficiency in detail provide evidence in support of the concept (Gilson and Kraakman, 2006;Malkiel, 2003), and many researchers have demonstrated that legislation affects the anticipated future profitability of firms (Ramiah et al, 2015;Chandy et al, 1995;Hackl and Testani, 1988;Conner, 1989;Romano, 1987).…”

Section: Event Studiesmentioning

confidence: 99%

The LMRDA. Another labor law that benefits firms?

2017

IJLMA

Purpose This paper aims to examine the impact of the Labor Management Reporting and Disclosure Act (LMRDA). It is expected that returns would have increased in response to the law’s passage, as it imposed a number of restrictions on unions vis-à-vis management and instituted many rules regulating unions’ internal affairs. Design/methodology/approach This paper uses event study methodology, which examines the impact of the law’s passage on the shareholder returns to the firms likely to have been affected by the law. Three different samples are used. Shareholder returns are examined on critical dates associated with the passage of the law to assess whether it benefited the firms in the samples. Findings Shareholder returns to firms expected to have been affected by the LMRDA fell in comparison to their competitors’ returns, indicating that the law was viewed by investors as being beneficial for firms. Presumably, the restrictions the law placed on unions were judged to be more important by investors than the improvement in unions’ image that might have resulted from the law, indicating that the law benefitted firms. Originality/value This is the first paper that has examined the impact of the LMRDA empirically to assess its impact on firms.

“…While there are critics of event studies and the underlying efficient market hypothesis who draw on models of herd behavior and social dynamics (Banerjee 1992; Bikhchandani, Hirshleifer, and Welch 1991), most scholars who have investigated the subject of market efficiency in detail provide evidence in support of the concept (Gilson and Kraakman 2003; Malkiel 2003); event‐study methodology has been used successfully to assess the effects of legislation in many prior studies. Researchers have concluded repeatedly that legislation affects the anticipated future profitability of firms (Chandy et al 1995; Conner 1989; Hackl and Testani 1988; Romano 1987).…”

Section: Assessing the Impact On Employers Of The Health Insurance Acmentioning

confidence: 99%

California's Health Insurance Act of 2003: View of the Market

Voos

2008

Industrial Relations

This “play or pay” mandate would have required California employers to either provide medical insurance for their employees or pay into a state insurance fund. Although the law ultimately did not go into effect, movements in shareholder wealth provide evidence about the differential effects of such health‐care mandates on various types of employers. Large or unionized firms had no negative effects; expected profits declined most for firms with 50–199 employees.