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Concession Bargaining: The Impact on Shareholders' Equity

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  • Brian E. Becker

Abstract

This analysis of bargaining settlements in 1982–83 shows that, on average, shareholders in those firms that negotiated concessionary settlements enjoyed an 8 to 10 percent increase in the value of their holdings. The author interprets this result to mean not that the value of the firm increased, but rather that concessions enlarged the shareholders' portion of the firm's value at the expense of the workers' portion. On the other hand, concession bargaining does not seem to have reallocated business risk between shareholders and labor. Finally, the evidence suggests that firm-specific sources of risk can explain, in part, not only the magnitude of the concession effects but also the probability that concession bargaining will occur.

Suggested Citation

  • Brian E. Becker, 1987. "Concession Bargaining: The Impact on Shareholders' Equity," ILR Review, Cornell University, ILR School, vol. 40(2), pages 268-279, January.
    • Handle: RePEc:sae:ilrrev:v:40:y:1987:i:2:p:268-279
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    Cited by:

    1. David S. Lee & Alexandre Mas, 2012. "Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961--1999," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 333-378.
    2. John M. Abowd & George T. Milkovich & John M. Hannon, 1990. "The Effects of Human Resource Management Decisions on Shareholder Value," ILR Review, Cornell University, ILR School, vol. 43(3), pages 203-2-236-, April.
    3. Afik, Zvika & Haim, Roi & Lahav, Yaron, 2019. "Advance notice labor conflicts and firm value—An event study analysis on Israeli companies," Finance Research Letters, Elsevier, vol. 31(C).

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