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The (non-) effect of labor unionization on firm risk: Evidence from the options market

Mohamed Ghaly, Alexandros Kostakis and Konstantinos Stathopoulos

Journal of Corporate Finance, 2021, vol. 66, issue C

Abstract: Labor unionization has no causal effect on firm risk. Using a regression discontinuity design to study the impact of labor union elections on option-implied firm risk, we find that unionization per se does not affect investor perceptions about firm price, tail, or variance risk. This finding is robust to studying very short (5-trading day) and long (up to 2-year) windows around the elections. Moreover, there is no unionization effect on firm risk either in subsets of firms facing strong union bargaining power, or with characteristics that prior literature identifies as important determinants of the effect of unionization on firm outcomes.

Keywords: Unionization; Labor power; Option-implied firm risk; Regression discontinuity design (search for similar items in EconPapers)
JEL-codes: G30 G32 J51 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:66:y:2021:i:c:s0929119920302601

DOI: 10.1016/j.jcorpfin.2020.101816

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