Does unionization affect the manager–shareholder conflict? Evidence from firm-specific stock price crash risk

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Article number101991
Journal / PublicationJournal of Corporate Finance
Online published2 Jun 2021
Publication statusPublished - Aug 2021


This study examines whether and how labor unionization influences firm-specific stock price crash risk. Using a regression discontinuity design that leverages locally exogenous variation in unionization generated by close union elections, we find that unionization leads to a significant decline in crash risk. We further explore the underlying mechanisms through which unionization affects crash risk and find that unions limit risk-taking, constrain overinvestment, and improve information flow, which in turn reduces crash risk. Overall, our study resolves some of the current debate over the implications of unions and sheds new light on their net impact on shareholder welfare.

Research Area(s)

  • Information flow, Overinvestment, Risk-taking, Stock price crash risk, Unionization