TY - JOUR
T1 - The (non-) effect of labor unionization on firm risk: Evidence from the options market
AU - Ghaly, Mohamed
AU - Kostakis, Alexandros
AU - Stathopoulos, Konstantinos
N1 - Funding Information:
The authors thank the Editor and three anonymous reviewers for their comments and suggestions. Kostakis and Stathopoulos acknowledge financial support from the Alliance MBS Strategic Research Investment Fund .
Publisher Copyright:
© 2020 Elsevier B.V.
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2021/2/1
Y1 - 2021/2/1
N2 - 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.
AB - 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.
KW - Labor power
KW - Option-implied firm risk
KW - Regression discontinuity design
KW - Unionization
U2 - 10.1016/j.jcorpfin.2020.101816
DO - 10.1016/j.jcorpfin.2020.101816
M3 - Article
SN - 0929-1199
VL - 66
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
IS - 1
M1 - 101816
ER -