The Effect of Wage Bargains on the Stock Market Value of the Firm
John Abowd ()
American Economic Review, 1989, vol. 79, issue 4, 774-800
The author estimates the change in the value of common stock resulting from an unexpected change in collectively bargained labor costs. Using bargaining unit wage data and NYSE stock returns, he estimates a dollar for dollar trade-off between these variables. This result is consistent with stock valuations based on present value maximizing managerial decisions; that is, the results are consistent with Hotelling's lemma. The author also finds support for the hypothesis that collective bargains maximize the sum of shareholder and union member wealth; that is, the results are consistent with strong efficiency in the contracting environment. Copyright 1989 by American Economic Association.
References: Add references at CitEc
Citations: View citations in EconPapers (76) Track citations by RSS feed
Downloads: (external link)
http://links.jstor.org/sici?sici=0002-8282%2819890 ... O%3B2-M&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:79:y:1989:i:4:p:774-800
Ordering information: This journal article can be ordered from
Access Statistics for this article
American Economic Review is currently edited by Esther Duflo
More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().