Unionization, Cash, and Leverage

Martin Schmalz

No 12595, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: What is the effect of unionization on corporate financial policies? The average unionized firm responds with lower cash and higher leverage to a unionization election than the average firm escaping unionization. However, using a regression discontinuity design I find that the causal effect of unionization is close to zero on average, but heterogeneous across firms. For the subset of large and financially unconstrained firms, the causal effect is positive on leverage and negative on cash; the opposite is true for small and financially constrained firms. These results help reconcile controversially discussed views on how corporate finance and labor interact.

Keywords: Capital structure; Cash; Risk management; Labor adjustment costs; Unionization; Regression discontinuity (search for similar items in EconPapers)
JEL-codes: G32 J50 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-lab and nep-rmg
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Citations: View citations in EconPapers (4)

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