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Do Labor Unions Affect Stock Price Crash Risk?

Author

Listed:
  • Hamdi Ben-Nasr
  • Abdullah Al-Dahmash
  • Hamdi Ben-Nasr

Abstract

This paper examines the influence of labor unions on stock price crash risk. Using a large sample of U.S. firms over the period 1984-2013, we provide the evidence that labor unions increase the likelihood to experience future stock price crashes. This finding is consistent with the argument that firms facing strong labor unions tend to report lower accounting information, in order to preserve bargaining power when negotiating contracts with labor unions. Further, we find that the adverse effects of labor unions on stock price crash risk are less pronounced for firms with strong external monitoring mechanisms, such as high institutional ownership and high analyst coverage.

Suggested Citation

  • Hamdi Ben-Nasr & Abdullah Al-Dahmash & Hamdi Ben-Nasr, 2015. "Do Labor Unions Affect Stock Price Crash Risk?," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 6(2), pages 11-22, April.
    • Handle: RePEc:jfr:ijfr11:v:6:y:2015:i:2:p:11-22
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    References listed on IDEAS

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    Cited by:

    1. Kim, Jeong-Bon & Zhang, Eliza Xia & Zhong, Kai, 2021. "Does unionization affect the manager–shareholder conflict? Evidence from firm-specific stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 69(C).

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