Labor unions and financial statement comparability

Richard Borghesi, Kiyoung Chang, Jong Chool Park and Hakjoon Song

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: We demonstrate that managers of highly unionized firms make accounting decisions that result in diminished financial statement comparability, thereby enhancing their leverage in collective bargaining. We corroborate using a difference-in-differences approach which leverages the introduction of right-to-work laws as an exogenous shock that weakens labor union bargaining power. We also find that the impact of union power on financial statement comparability is more pronounced for firms having lower accounting complexity, financial flexibility, and employee orientation, and for firms headquartered in states having stronger democratic party orientation.

Keywords: Financial statement comparability; Labor unions (search for similar items in EconPapers)
JEL-codes: J52 J53 M41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s154461232400223x

DOI: 10.1016/j.frl.2024.105193

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