Unionization, Cash, and Leverage

Schmalz, Martin C. Unionization, Cash, and Leverage. UNSPECIFIED.

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What is the effect of unionization on corporate financial policies? The average unionized firm responds with lower cash and higher leverage to a unionization election than the average firm escaping unionization. However, using a regression discontinuity design I find that the causal effect of unionization is close to zero on average, but heterogeneous across firms. For the subset of large and financially unconstrained firms, the causal effect is positive on leverage and negative on cash; the opposite is true for small and financially constrained firms. These results help reconcile controversially discussed views on how corporate finance and labor interact.

Item Type: Other Working Paper
Keywords: Unionization, cash, leverage, capital structure, labor adjustment costs, finance
Subject(s): Finance
Date Deposited: 07 Jan 2019 16:03
Last Modified: 07 Jan 2019 16:03
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/7224

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