Equity Risk and the Labor Stock: The Case of Union Contracts

Joshua G. Rosett

Journal of Accounting Research, 2001, vol. 39, issue 2, 337-364

Abstract: This paper investigates the role of the stock of unionized labor in determining equity investment risk. I estimate a labor stock measure based on expected compensation costs, and use the ratio of labor stock to total assets as a risk proxy. At the median, the labor stock is comparable in magnitude to total assets. Regression estimates show the associations between labor‐based risk proxies and equity market risk measures are both economically and statistically significant. In addition, the labor‐based measures provide risk information over and above information contained in standard risk proxies such as financial and operating leverage.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:bla:joares:v:39:y:2001:i:2:p:337-364

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Journal of Accounting Research is currently edited by Philip G. Berger, Luzi Hail, Christian Leuz, Haresh Sapra, Douglas J. Skinner, Rodrigo Verdi and Regina Wittenberg Moerman

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