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Labor unions and financial statement comparability

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  • Borghesi, Richard
  • Chang, Kiyoung
  • Park, Jong Chool
  • Song, Hakjoon

Abstract

We demonstrate that managers of highly unionized firms make accounting decisions that result in diminished financial statement comparability, thereby enhancing their leverage in collective bargaining. We corroborate using a difference-in-differences approach which leverages the introduction of right-to-work laws as an exogenous shock that weakens labor union bargaining power. We also find that the impact of union power on financial statement comparability is more pronounced for firms having lower accounting complexity, financial flexibility, and employee orientation, and for firms headquartered in states having stronger democratic party orientation.

Suggested Citation

  • Borghesi, Richard & Chang, Kiyoung & Park, Jong Chool & Song, Hakjoon, 2024. "Labor unions and financial statement comparability," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s154461232400223x
    DOI: 10.1016/j.frl.2024.105193
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    More about this item

    Keywords

    Financial statement comparability; Labor unions;

    JEL classification:

    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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