Financial Policies of Organized Labor in the 21st Century

43 Pages Posted: 7 May 2022

See all articles by Alice (Yanguang) Liu

Alice (Yanguang) Liu

University of Arizona, Eller College of Management, Department of Finance; New Jersey Institute of Technology, Martin Tuchman School of Management

Ryan Williams

Imperial College London; Enoda

David Yin

Miami University of Ohio

Date Written: April 2021

Abstract

Although frequently considered an independent and opposing force to capital, modern labor unions face many of the same pressures as businesses. Using a novel sample of union financial statements, we document that unions behave like corporations in a variety of ways. Unions often have well-compensation teams of executives whose incentives may become misaligned with members. Their relative cash and leverage choices are well-explained by extant corporate finance theories. Unions invest in capital expenditures and public security markets. They appear to be prone to agency problems. More competitive environments are correlated with leaner financial policies and lower executive compensation. Misalignment in incentives between members and the union is related to higher executive compensation, worse performance, and more unrelated investment.

Suggested Citation

Liu, Yanguang and Williams, Ryan and Yin, David, Financial Policies of Organized Labor in the 21st Century (April 2021). Available at SSRN: https://ssrn.com/abstract=4083885 or http://dx.doi.org/10.2139/ssrn.4083885

Yanguang Liu (Contact Author)

University of Arizona, Eller College of Management, Department of Finance ( email )

New Jersey Institute of Technology, Martin Tuchman School of Management ( email )

University Heights
Newark, NJ 07102
United States

Ryan Williams

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Enoda ( email )

David Yin

Miami University of Ohio ( email )

Oxford, OH 45056
United States

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