Corporate Financial Strategy and Collective Bargaining with Union

Abstract

My sample consists of 7 824 firm-year observations in the U S manufacturing industry during 2003-2012 period I provide evidence that firms hold less cash reserves and increase their debt ratio when they face more powerful labor unions I analyze the effect of unionization on corporate cash holdings and capital structure I find a negative relation between the unionization rate and cash holdings However I find a positive relation between the unionization rate and debt ratio My findings suggest that firms use financial strategy to improve their bargaining position prior to the negotiation with unions in collective bargaining It means that firms signal to unions for the financial condition and make them to concede in negotiation Additionally I discuss the possible actions which can improve the bargaining power in collective bargaining for firms and unions to help decision making

Date of Award	2015 Jan 27
Original language	English
Supervisor	Ping-Hsun Huang (Supervisor)