Article1984

Unionization and Profitability: Evidence from the Capital Market

213 citations0/0 files storedJournal of Political Economy

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Labor Movements and Unions Financial Markets and Investment Strategies Corporate Finance and Governance

Abstract

This paper examines the effect of unionization on the profitability of firms. Abnormal monthly common stock returns for a sample of 253 NYSE-listed firms are estimated for the month in which the union petitions for an election and for the month in which the National Labor Relations Board certifies the election outcome. The results suggest that unionization, on average, is associated with a reduction in equity value. When unions win an election, the average loss associated with the unionization drive is 3.8 percent of equity value. When unions lose an election, there is an average net reduction of 1.3 percent in the equity value of the firm.

Citations in this library

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References

2003The Adjustment of Stock Prices to New Information 1977Foundations of Finance.1980The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations

Cited by

2010Labor Unions, Operating Flexibility, and the Cost of Equity 1991The Threat of Unionization, the Use of Debt, and the Preservation of Shareholder Wealth 2014Labor Protection and Leverage 2004Capital, Labor, and the Firm: A Study of German Codetermination 1986Union Rent Seeking, Intangible Capital, and Market Value of the Firm 2013Labor unions and tax aggressiveness 1987Labor Rent Sharing and Regulation: Evidence from the Trucking Industry 1984Tobin's q, Unionization, and the Concentration-Profits Relationship

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