Labor unions and corporate financial leverage: the bargaining device versus crowding-out hypotheses

Woods, Keegan, Tan, Kelvin Jui Keng and Faff, Robert (2017) Labor unions and corporate financial leverage: the bargaining device versus crowding-out hypotheses. Journal of Financial Intermediation, . doi:10.1016/j.jfi.2017.05.005


Author Woods, Keegan
Tan, Kelvin Jui Keng
Faff, Robert
Title Labor unions and corporate financial leverage: the bargaining device versus crowding-out hypotheses
Journal name Journal of Financial Intermediation   Check publisher's open access policy
ISSN 1042-9573
1096-0473
Publication date 2017-06-19
Sub-type Article (original research)
DOI 10.1016/j.jfi.2017.05.005
Open Access Status Not yet assessed
Total pages 44
Place of publication Maryland Heights, United States
Publisher Academic Press
Language eng
Formatted abstract
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.
Keyword Labor unions
Firm indebtedness
United States
Crowding-out hypothesis
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: HERDC Pre-Audit
UQ Business School Publications
 
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Created: Thu, 18 May 2017, 22:54:06 EST by Dr Kelvin Jui Keng Tan on behalf of UQ Business School