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SECURITIES PRICE EFFECTS OF UNIONIZATION LEGISLATION
Author(s) -
Naiker Vic,
Navissi Farshid
Publication year - 2006
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.2006.00166.x
Subject(s) - legislation , stock price , legislature , stock (firearms) , labour economics , employment protection legislation , monetary economics , economics , business , law , macroeconomics , unemployment , political science , mechanical engineering , paleontology , series (stratigraphy) , biology , engineering
Prior studies document that firms experience negative stock price effects in response to unionization. We study the economic effects of a radical change in unionization legislation in New Zealand and hypothesize that the stock price effect of unionization is a function of prior unionization status of firms. We provide evidence that legislative events that increase the likelihood of introducing more stringent legislation do not affect stock prices of high‐unionized firms, whereas low‐unionized firms are affected negatively and significantly. Legislative events that signal less stringent unionization legislation result in significant stock price increases for all firms.