Debt as Threat: Evidence from Union-Sponsored Shareholder Proposals

56 Pages Posted: 27 Nov 2017 Last revised: 1 Dec 2018

See all articles by Alberta Di Giuli

Alberta Di Giuli


Arthur Petit-Romec

SKEMA Business School; Université Côte d'Azur

Date Written: February 1, 2018


This paper studies how leverage affects the interaction between firms and labor unions using data on shareholder proposals. We find a negative association between leverage and both the probability of being targeted by union-sponsored proposals and the number of shareholder proposals submitted by unions. Our results are consistent with the idea that capital structure affects labor unions’ behavior and suggest that debt deters unions from engaging in negotiation tactics. Additional tests indicate that this effect is largely concentrated in governance – related proposals, particularly proposals regarding executive compensation and board elections, and is more pronounced in firms in poor financial condition.

Keywords: Leverage, Capital Structure, Unions, Labor Unions, Shareholder Proposals

JEL Classification: G32, J51, J53

Suggested Citation

Di Giuli, Alberta and Petit-Romec, Arthur, Debt as Threat: Evidence from Union-Sponsored Shareholder Proposals (February 1, 2018). Paris December 2018 Finance Meeting EUROFIDAI - AFFI, Available at SSRN: or

Alberta Di Giuli

ESCP ( email )

Paris Campus
79, Avenue de la Republique
Paris, 75011

Arthur Petit-Romec (Contact Author)

SKEMA Business School ( email )

Sophia Antipolis

Université Côte d'Azur ( email )


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