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Union Representation Elelctions and Firm Profitability
Author(s) -
BRONARS STEPHEN G.,
DEERE DONALD R.
Publication year - 1990
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.1990.tb00739.x
Subject(s) - equity (law) , wage , profitability index , labour economics , shareholder , representation (politics) , economics , demographic economics , business , corporate governance , finance , political science , politics , law
Union representation elections are associated with significant declines in firm profitability. In addition to the significant mean effect of union elections on the equity value of firms, there exists substantial variation in the magnitude of equity losses across individual election events. Cross‐sectional variation in shareholder equity losses can be explained by the labor intensity of the firm, the size of the union wage premium and fraction of workers organized in “the firm's industry,.” the presence or absencse of right‐to‐work lows in the state where the election is held, the member of workers covered in the representaion election, and the number of previous union representation election in the firm. The empirical results indiacte the equity losses are the greatest in industries where union wage gain are the highest and unionization rates are the largest, and in the most labor‐intensive firms, independent of the size of the bargaining unit involved in the election. The latter result indicates the presence of union spillover effects.