Abstract

https://ssrn.com/abstract=2497823
 


 



Labor Unions and Corporate Financial Leverage: The Bargaining Device versus Crowding-out Hypotheses


Keegan Lee Woods


University of Queensland, Business School, Students

Kelvin Jui Keng Tan


University of Queensland - Business School; Financial Research Network (FIRN)

Robert W. Faff


University of Queensland

May 19, 2016

Asian Finance Association (AsianFA) 2015 Conference Paper

Abstract:     
We examine the empirical relation between the labor unions and firm indebtedness in the contemporary United States. Our identification strategy exploits two negative exogenous shocks in union power and the threat of unionization. Additionally, we develop a novel firm-level proxy for the bargaining power of labor using collective bargaining information from mandatory IRS filings from 1999 to 2013. Across a battery of tests, we document evidence favoring crowding out, that is, the robust existence of a statistically and economically significant negative relation between labor unions and financial leverage. Notably, this effect is more pronounced for profitable firms.

Number of Pages in PDF File: 58

Keywords: Labor Unions, Capital Structure, Bargaining, Operating Leverage, Natural Experiment

JEL Classification: J31, J51, G32, G33, K31


Open PDF in Browser Download This Paper

Date posted: September 18, 2014 ; Last revised: May 23, 2016

Suggested Citation

Woods, Keegan Lee and Tan, Kelvin Jui Keng and Faff, Robert W., Labor Unions and Corporate Financial Leverage: The Bargaining Device versus Crowding-out Hypotheses (May 19, 2016). Asian Finance Association (AsianFA) 2015 Conference Paper. Available at SSRN: https://ssrn.com/abstract=2497823

Contact Information

Keegan Lee Woods
University of Queensland, Business School, Students ( email )
St Lucia
Australia
Kelvin Jui Keng Tan (Contact Author)
University of Queensland - Business School ( email )
Brisbane, Queensland 4072
Australia
Financial Research Network (FIRN) ( email )
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Robert W. Faff
University of Queensland ( email )
St Lucia
Brisbane, Queensland 4072
Australia
Feedback to SSRN


Paper statistics
Abstract Views: 1,487
Downloads: 235
Download Rank: 102,408
Paper comments
No comments have been made on this paper