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Do Labor Unions Affect Income Smoothing Through R&D Management?

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  • Ilhang Shin
  • Sorah Park

Abstract

Using the firm-level labor union data unique to Korea, this study examines the influence of labor unions on firms’ income smoothing activities through R&D expense adjustment. We show that unionized firms have greater extent of income smoothing through R&D adjustment, suggesting that labor unions impose pressure on management to smooth out fluctuation in earnings path. Also, we find evidence that the positive association between labor union and income smoothing via R&D expense is significant only for non-chaebol firms. These findings add to the existing literature on the impact of labor unions, one of important stakeholders, on firms’ accounting choices and financial reporting behavior.

Suggested Citation

  • Ilhang Shin & Sorah Park, 2022. "Do Labor Unions Affect Income Smoothing Through R&D Management?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(14), pages 4136-4148, November.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:14:p:4136-4148
    DOI: 10.1080/1540496X.2022.2088346
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