Labor unions, operating flexibility, and the cost of equity

Journal of Financial and Quantitative Analysis

Volumn 46, Issue 1, 2011, Pages 25-58

  Chen, Huafeng ^a   Kacperczyk, Marcin ^b,c   Ortiz Molina, Hernán ^a  

^a UNIVERSITY OF BRITISH COLUMBIA   (Canada)

^b NEW YORK UNIVERSITY   (United States)

^c NATIONAL BUREAU OF ECONOMIC RESEARCH   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 80053062202     PISSN: 00221090     EISSN: 17566916     Source Type: Journal    
DOI: 10.1017/S0022109010000645     Document Type: Article

References (51)

1. Abowd, J. M. "The Effect of Wage Bargains on the Stock Market Value of the Firm." American Economic Review, 79 (1989), 774-800.
2. Abraham, K. G., and J. L. Medoff. "Length of Service and Layoffs in Union and Nonunion Work Groups." Industrial and Labor Relations Review, 38 (1984), 87-97.
3. Booth, L. "The Influence of Production Technology on Risk and the Cost of Capital." Journal of Financial and Quantitative Analysis, 26 (1991), 109-127.
4. Bronars, S. G., and D. R. Deere. "The Threat of Unionization, the Use of Debt, and the Preservation of Shareholder Wealth." Quarterly Journal of Economics, 106 (1991), 231-254.
5. Carlson, M.; A. Fisher; and R. Giammarino. "Corporate Investment and Asset Price Dynamics: Implications for the Cross-Section of Returns." Journal of Finance, 59 (2004), 2577-2603. (Pubitemid 40019735)
6. Cochrane, J. H. "Production-Based Asset Pricing and the Link between Stock Returns and Economic Fluctuations." Journal of Finance, 46 (1991), 207-234.
7. Cochrane, J. H. "A Cross-Sectional Test of an Investment-Based Asset Pricing Model." Journal of Political Economy, 104 (1996), 572-621.
8. Connolly, R. A.; B. T. Hirsch; and M. Hirschey. "Union Rent Seeking, Intangible Capital, and Market Value of the Firm." Review of Economics and Statistics, 68 (1986), 567-577.
9. Cooper, I. "Asset Pricing Implications of Nonconvex Adjustment Costs and Irreversibility of Investment." Journal of Finance, 61 (2006), 139-170. (Pubitemid 43425515)
10. Danthine, J.-P., and J. B. Donaldson. "Labour Relations and Asset Returns." Review of Economic Studies, 69 (2002), 41-64. (Pubitemid 34179816)
11. Dowrick, S., and B. J. Spencer. "Union Attitudes to Labor-Saving Innovation: When Are Unions Luddites?" Journal of Labor Economics, 12 (1994), 316-344.
12. Ellwood, D. T., and G. Fine. "The Impact of Right-to-Work Laws on Union Organizing." Journal of Political Economy, 95 (1987), 250-273.
13. Fama, E. F., and K. R. French. "Common Risk Factors in the Returns on Stocks and Bonds." Journal of Financial Economics, 33 (1993), 3-56.
14. García-Feijóo, L., and R. D. Jorgensen. "Can Operating Leverage Be the Cause of the Value Premium?" Financial Management, 39 (2010), 1127-1153.
15. Gebhardt, W. R.; C. M. C. Lee; and B. Swaminathan. "Toward an Implied Cost of Capital." Journal of Accounting Research, 39 (2001), 135-176.
16. Gomes, J.; L. Kogan; and L. Zhang. "Equilibrium Cross Section of Returns." Journal of Political Economy, 111 (2003), 693-732. (Pubitemid 37224546)
17. Gourio, F. "Labor Leverage, Firm's Heterogeneous Sensitivities to the Business Cycle, and the Cross-Section of Expected Returns." Working Paper, Boston University (2007).
18. Gramm, C. L., and J. F. Schnell. "The Use of Flexible Staffing Arrangements in Core Production Jobs." Industrial and Labor Relations Review, 54 (2001), 245-258. (Pubitemid 33602935)
19. Guay, W. R.; S. P. Kothari; and S. Shu. "Properties of Implied Cost of Capital Using Analysts' Forecasts." Working Paper, Massachusetts Institute of Technology (2006).
20. Hirsch, B. T. "The Determinants of Unionization: An Analysis of Interarea Differences." Industrial and Labor Relations Review, 33 (1980), 147-161.
21. Hirsch, B. T. "The Interindustry Structure of Unionism, Earnings, and Earnings Dispersion." Industrial and Labor Relations Review, 36 (1982), 22-39.
22. Hirsch, B. T. Labor Unions and the Economic Performance of Firms. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research (1991a).
23. Hirsch, B. T. "Union Coverage and Profitability among U.S. Firms." Review of Economics and Statistics, 73 (1991b), 69-77.
24. Hirsch, B. T., and D. A. Macpherson. "Union Membership and Coverage Database from the Current Population Survey: Note." Industrial and Labor Relations Review, 56 (2003), 349-354.
25. Ittner, C. D.; R. A. Lambert; and D. F. Larcker. "The Structure and Performance Consequences of Equity Grants to Employees of New Economy Firms." Journal of Accounting and Economics, 34 (2003), 89-127. (Pubitemid 36027667)
26. Jagannathan, R., and Z. Wang. "The Conditional CAPM and the Cross-Section of Expected Returns." Journal of Finance, 51 (1996), 3-53. (Pubitemid 126314153)
27. Jermann, U. J. "Asset Pricing in Production Economies." Journal of Monetary Economics, 41 (1998), 257-275. (Pubitemid 128339197)
28. Kahle, K. M., and R. A. Walkling. "The Impact of Industry Classifications on Financial Research." Journal of Financial and Quantitative Analysis, 31 (1996), 309-335. (Pubitemid 126313389)
29. Karpoff, J. M.; P. H. Malatesta; and R. A. Walkling. "Corporate Governance and Shareholder Initiatives: Empirical Evidence." Journal of Financial Economics, 42 (1996), 365-395. (Pubitemid 126164695)
30. Kogan, L. "Asset Prices and Real Investment." Journal of Financial Economics, 73 (2004), 411-431. (Pubitemid 39150828)
31. Lee, C.; D. Ng; and B. Swaminathan. "Testing International Asset Pricing Models Using Implied Costs of Capital." Journal of Financial and Quantitative Analysis, 44 (2009), 307-335.
32. Lev, B. "On the Association between Operating Leverage and Risk." Journal of Financial and Quantitative Analysis, 9 (1974), 627-641.
33. Lewis, H. G. "Union Relative Wage Effects." In Handbook of Labor Economics, Vol. II, O. C. Ashenfelter and R. Layard, eds. New York, NY: Elsevier Science (1986), 1139-1181.
34. Lipset, S. M., and I. Katchanovski. "The Future of Private Sector Unions in the U.S." Journal of Labor Research, 22 (2001), 229-244. (Pubitemid 33242731)
35. Mandelker, G. N., and S. G. Rhee. "The Impact of the Degrees of Operating and Financial Leverage on Systematic Risk of Common Stock." Journal of Financial and Quantitative Analysis, 19 (1984), 45-57.
36. Matsa, D. A. "Capital Structure as a Strategic Variable: Evidence from Collective Bargaining." Journal of Finance, 65 (2010), 1197-1232.
37. McLaughlin, D. B., and D. A. Fraser. "Collective Bargaining: The Next Twenty Years." Annals of the American Academy of Political and Social Science, 473 (1984), 33-39.
38. Merz, M., and E. Yashiv. "Labor and the Market Value of the Firm." American Economic Review, 97 (2007), 1419-1431.
39. Mitchell, D. J. B. "Wage Flexibility: Then and Now." Industrial Relations, 24 (1985), 266-279.
40. Modigliani, F., and M. H. Miller. "The Cost of Capital, Corporation Finance and the Theory of Investment." American Economic Review, 48 (1958), 261-297.
41. Newey, W. K., and K. D. West. "A Simple, Positive Semi-Definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix." Econometrica, 55 (1987), 703-708.
42. Novy-Marx, R. "Operating Leverage." Review of Finance, forthcoming (2011).
43. Pástor, L.; M. Sinha; and B. Swaminathan. "Estimating the Intertemporal Risk-Return Tradeoff Using the Implied Cost of Capital." Journal of Finance, 63 (2008), 2859-2897.
44. Rose, D. C. "Are Strikes Less Effective in Conglomerate Firms?" Industrial and Labor Relations Review, 45 (1991), 131-144.
45. Rosett, J. G. "Equity Risk and the Labor Stock: The Case of Union Contracts." Journal of Accounting Research, 39 (2001), 337-364.
46. Rosett, J. G. "Labor Leverage, Equity Risk, and Corporate Policy Choice." European Accounting Review, 12 (2003), 699-732.
47. Ruback, R. S., and M. B. Zimmerman. "Unionization and Profitability: Evidence from the Capital Market." Journal of Political Economy, 92 (1984), 1134-1157.
48. Rubinstein, M. E. "A Mean-Variance Synthesis of Corporate Financial Theory." Journal of Finance, 28 (1973), 167-181.
49. Santos, T., and P. Veronesi. "Labor Income and Predictable Stock Returns." Review of Financial Studies, 19 (2006), 1-44. (Pubitemid 43007154)
50. Wunnava, P., and A. A. Okunade. "Countercyclical Union Wage Premium? Evidence for the 1980s." Journal of Labor Research, 17 (1996), 289-296.
51. Zhang, L. "The Value Premium." Journal of Finance, 60 (2005), 67-103. (Pubitemid 40132089)