Do Managers Withhold Good News from Labor Unions?

Management Science, Forthcoming

57 Pages Posted: 16 Sep 2011 Last revised: 8 Jun 2016

See all articles by Richard Chung

Richard Chung

The Hong Kong Polytechnic University

Bryan Byung-Hee Lee

NEOMA Business School; University of Macau

Woo-Jong Lee

Seoul National University

Byungcherl Charlie Sohn

University of Macau - Department of Accounting and Information Management

Date Written: September 1, 2014

Abstract

With scarce empirical support, prior literature argues that managers tend to withhold good news and promote bad news to preserve their bargaining power against labor unions. This paper provides empirical evidence on this rarely supported argument. Using comprehensive firm-level data from Korea where labor unions have a long tradition of making credible threats, we find that overall disclosure frequency is negatively related to labor union strength, and that this relation is more pronounced in firms with good news. We also find that firms with strong labor unions withhold good news during the labor negotiation period and release it in a gradual fashion afterwards and that this pattern is more prominent than that of the firms with weak or no unions, implying that managers time news disclosures according to bargaining schedules to achieve better outcomes in labor negotiations. These results are robust to various sensitivity tests.

Keywords: Labor Union, Disclosure, Timing Disclosure

JEL Classification: G14, J50, M41, M54

Suggested Citation

Chung, Richard and Lee, Bryan Byung-Hee and Lee, Woo-Jong and Sohn, Byungcherl Charlie, Do Managers Withhold Good News from Labor Unions? (September 1, 2014). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1927185 or http://dx.doi.org/10.2139/ssrn.1927185

Richard Chung

The Hong Kong Polytechnic University ( email )

School of Accounting & Finance
Hung Hom, Kowloon
Hong Kong

Bryan Byung-Hee Lee

NEOMA Business School ( email )

1 Rue du Maréchal Juin
Mont Saint Aignan Cedex, 76825
France
+330602092248 (Phone)

University of Macau ( email )

Av. Padre Tomas Pereira
Taipa
Macau, No zipcode
Macau
+853-6208-0424 (Phone)

HOME PAGE: http://www.umac.mo

Woo-Jong Lee

Seoul National University ( email )

Gwanak-ro 1, Gwanak-gu
Seoul, 151-916
Korea, Republic of (South Korea)

Byungcherl Charlie Sohn (Contact Author)

University of Macau - Department of Accounting and Information Management ( email )

Ave. Padre Tomas Pereira
Taipa
Macau
China

Register to save articles to
your library

Register

Paper statistics

Downloads
294
Abstract Views
1,908
rank
101,762
PlumX Metrics