Do Managers Withhold Good News from Labor Unions?

Richard Chung (), Bryan Byung-Hee Lee (), Woo-Jong Lee () and Byungcherl Charlie Sohn ()
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Richard Chung: Griffith Business School, Griffith University, Nathan QLD 4111, Australia
Bryan Byung-Hee Lee: Faculty of Business Administration, University of Macau, Taipa, Macau, China
Woo-Jong Lee: College of Business Administration, Seoul National University, Seoul, Republic of Korea
Byungcherl Charlie Sohn: Faculty of Business Administration, University of Macau, Taipa, Macau, China

Management Science, 2016, vol. 62, issue 1, 46-68

Abstract: With scarce empirical support, prior literature argues that managers tend to withhold good news and promote bad news to preserve their bargaining power against labor unions. This paper provides empirical evidence of this rarely supported argument. Using comprehensive firm-level data from South Korea, where labor unions have a long tradition of making credible threats, we find that overall disclosure frequency is negatively related to labor union strength, and that this relation is more pronounced in firms with good news. We also find that firms with strong labor unions withhold good news during the labor negotiation period and release it in a gradual fashion afterward and that this pattern is more prominent than that of firms with weak or no unions, implying that managers time news disclosures according to bargaining schedules to achieve better outcomes in labor negotiations. These results are robust to various sensitivity tests.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2075 . This paper was accepted by Mary Barth, accounting .

Keywords: labor union; disclosure; timing disclosure; good news versus bad news (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:62:y:2016:i:1:p:46-68

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