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Labor unionization and trade credit: A regression discontinuity design

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  • Qu, Jimmy Chengyuan

Abstract

This paper examines how labor unionization affects suppliers’ trade credit provisions. Using a regression discontinuity design based on close-call NLRB union elections, I find that firms narrowly passing union elections experience a significant decrease in trade credit from suppliers. This effect is attenuated in right-to-work states and for firms with better financial performance. These findings suggest that suppliers view unionization as a risk factor on labor costs, financial distress likelihood, and reduced operational flexibility. Overall, this paper adds to the literature on labor unions’ economic impacts, determinants of trade credit, and the interactions between different corporate claim holders.

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  • Qu, Jimmy Chengyuan, 2024. "Labor unionization and trade credit: A regression discontinuity design," Finance Research Letters, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324012613
    DOI: 10.1016/j.frl.2024.106232
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor unions; Trade credit; Regression discontinuity design;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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