TY - JOUR
T1 - Labor unions and corporate financial leverage: The bargaining device versus crowding-out hypotheses
AU - Woods, Keegan
AU - Tan, Kelvin Jui Keng
AU - Faff, Robert
N1 - Publisher Copyright:
© 2017 Elsevier Inc.
Copyright:
Copyright 2019 Elsevier B.V., All rights reserved.
PY - 2019/1
Y1 - 2019/1
N2 - We examine the empirical relation between 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. Further, in the context of panel regressions, 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 in favor of a crowding-out hypothesis — namely, a substitution effect between labor power and financial leverage. Notably, this effect is more pronounced in firms in labor-intensive and unionized industries.
AB - We examine the empirical relation between 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. Further, in the context of panel regressions, 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 in favor of a crowding-out hypothesis — namely, a substitution effect between labor power and financial leverage. Notably, this effect is more pronounced in firms in labor-intensive and unionized industries.
UR - http://www.scopus.com/inward/record.url?scp=85021642594&partnerID=8YFLogxK
U2 - 10.1016/j.jfi.2017.05.005
DO - 10.1016/j.jfi.2017.05.005
M3 - Article
AN - SCOPUS:85021642594
SN - 1042-9573
VL - 37
SP - 28
EP - 44
JO - Journal of Financial Intermediation
JF - Journal of Financial Intermediation
ER -