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Labor unions and information asymmetry among investors

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  • Xing, Xuejing
  • Yan, Shan

Abstract

We investigate whether and how labor unions affect information asymmetry among investors. To account for the endogeneity of unionization, we adopt an IV 2SLS model, a differences-in-differences technique, and Heckman’s (1979) two-stage procedure. We also explore an exogenous proxy for employees’ collective bargaining power. Using two samples, we find that after controlling for endogeneity, both industry- and firm-level unionization rates are significantly and negatively related to measures of information asymmetry among investors. The findings are consistent with the notion that labor unions or more broadly, employees with bargaining power, help reduce information asymmetry in capital markets.

Suggested Citation

  • Xing, Xuejing & Yan, Shan, 2018. "Labor unions and information asymmetry among investors," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 174-187.
    • Handle: RePEc:eee:quaeco:v:69:y:2018:i:c:p:174-187
    DOI: 10.1016/j.qref.2018.02.004
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    More about this item

    Keywords

    Information asymmetry; Labor unions; Information disclosure; Endogeneity;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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