The Bright Side of Unionization : The Case of Stock Price Crash Risk
Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (no ISBN/ISSN) › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
Original language | English |
---|---|
Publication status | Published - 12 Aug 2019 |
Conference
Title | American Accounting Association Annual Meeting |
---|---|
Place | United States |
City | San Francisco |
Period | 10 - 14 August 2019 |
Link(s)
Permanent Link | https://scholars.cityu.edu.hk/en/publications/publication(68efde59-39c4-4cb2-9a82-8adce45c984a).html |
---|
Abstract
This study examines whether and how labor unionization influences stock price crash risk. Using
a regression discontinuity design that employs union elections as an exogenous shock yielding
local variation in unionization, we find that unionization leads to a significant decline in stock
price crash risk. We further explore the underlying mechanisms through which unionization affects
crash risk and find that labor unions constrain managerial resource diversion and overinvestment,
demand less risk-taking, and facilitate transparent information flow, which in turn reduces crash
risk. Overall, our results suggest that unions play an important governance role. Our study sheds
new light on a formerly under-researched beneficial impact of unionization and the role that
organized labor plays in influencing extreme downside risk in the equity market.
Research Area(s)
- unionization, stock price crash risk, governance
Bibliographic Note
Since this conference is yet to commence, the information for this record is subject to revision.
Citation Format(s)
The Bright Side of Unionization : The Case of Stock Price Crash Risk. / Kim, Jeong-Bon; Zhang, Eliza Xia; Zhong, Kai .
2019. Paper presented at American Accounting Association Annual Meeting, San Francisco, United States.Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (no ISBN/ISSN) › peer-review