The Economic Consequences of Labor Unionization: Evidence from Stock Price Crash Risk

Jun Chen, Jamie Y. Tong, Wenming Wang, Feida Zhang

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This study investigates the impact of labor unionization on stock price crash risk. We find that labor unionization is negatively associated with stock price crash risk. Such negative relation is more pronounced when firms can intimate more credible evidence on unfavorable prospects and when firms face more powerful labor unions. Our findings are consistent with the notion that firms take strategic actions to reduce the bargaining advantages enjoyed by labor unions and that labor unions force firms to take less risky investments and discontinue underperformed projects more timely, which leads to lower stock price crash risk.

Original languageEnglish
Pages (from-to)775-796
Number of pages22
JournalJournal of Business Ethics
Volume157
Issue number3
DOIs
Publication statusPublished - Jul 2019

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