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LABOR UNIONS AND CORPORATE CASH HOLDINGS: EVIDENCE FROM INTERNATIONAL DATA
Author(s) -
Tong Zhenxu,
Huang Hui
Publication year - 2018
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/jfir.12152
Subject(s) - business , position (finance) , cash , employment protection legislation , monetary economics , economics , finance , unemployment , economic growth
Firms in countries with higher union membership have less corporate cash holdings. This negative relation is stronger for firms in countries with weak employment protection legislation, firms in countries with a high degree of labor bargaining centralization, and financially constrained firms. Moreover, the market value of corporate cash holdings is lower for firms in countries with high union membership. The number of strikes and lockouts is higher in countries with more corporate cash holdings. We conclude that firms strategically choose corporate cash holdings to gain a bargaining position with labor in an international setting.