Do Nonfinancial Stakeholders Affect the Pricing of Risky Debt? Evidence from Unionized Workers

Huafeng (Jason) Chen, Marcin Kacperczyk and Hernán Ortiz-Molina

Review of Finance, 2011, vol. 16, issue 2, 347-383

Abstract: The authors study the impact of a powerful nonfinancial stakeholder--unionized workers--on the pricing of corporate debt. Firms in more unionized industries have lower bond yields. This relation is stronger in firms with weaker financial conditions and cannot be explained by the correlation of unionization with industry characteristics, governance mechanisms, or financial leverage. Firms in unionized industries implement less risky investment policies and are less likely targets of acquisitions. Unionization reduces yields by more when firms' takeover barriers are lower. Hence, unions are viewed favorably in the bond market because, through their influence on corporate affairs, they protect bondholders' wealth. Copyright 2011, Oxford University Press.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (47)

Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfq028 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:revfin:v:16:y:2011:i:2:p:347-383

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Review of Finance is currently edited by Marcin Kacperczyk

More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().